Law Banning Rewards for Rescissions Caps Statewide Effort
Gov. Arnold Schwarzenegger's (R) signature this week on a bill banning health insurers from rewarding their employees for rescinding or limiting coverage comes on the heels of state regulators reaching deals with the state's five major insurers over rescissions.
The governor signed AB 1150 by Assembly member Ted Lieu (D-Torrance) on Tuesday. It is one of several bills aimed at the individual insurance market that lawmakers introduced following state investigations into rescissions, a practice in which insurers revoke policies after people get sick and file claims.
Only people who buy coverage in the individual health insurance market are subject to rescissions; members of group plans cannot have their coverage rescinded. An estimated 14 million Americans, including three million in California, have individual policies.
Last week, state regulators reached deals with the last of five major insurers in California to restore coverage to individual customers whose policies may have been rescinded unfairly. Anthem Blue Cross and Blue Shield of California will pay fines to the state totaling at least $13 million.
Earlier this year, Kaiser Permanente, Health Net and PacifiCare all made similar agreements with the state Department of Managed Health Care. All told, state regulators say they restored coverage to 3,370 Californians whose coverage was limited or denied.
In addition to AB 1150, here's a rundown on some other bills that the governor signed recently, as well as other measures on his desk.