Panel Probes Low Participation Rates in Rescission Settlements
On Wednesday, state officials and consumer advocates testified before an Assembly committee about possible reasons why many Californians whose health coverage had been rescinded have not participated in recent settlements, Capitol Weekly reports.
During the hearing, the Assembly Committee on Accountability and Administrative Review reviewed a new report finding that only a small fraction of the 6,000 consumers who were improperly dropped from their health plans have taken advantage of the settlements.
Bryan Liang -- author of the report and director of the Institute of Health Law Studies at the California Western School of Law -- testified that an additional 2,100 affected consumers have sought or are currently seeking payments from the health insurers either through individual cases or class-action lawsuits (York, Capitol Weekly, 3/11).
In 2008 and 2009, the departments of Managed Health Care and Insurance reached settlement agreements requiring five major insurers to offer new coverage to consumers whose individual insurance policies had beenÂ improperly rescinded between 2004 and 2008.
The settlements did not require the insurers to admit wrongdoing, but they did impose fines on some health plans (California Healthline, 3/10).
Amy Dobberteen, DMHC enforcement official, said the department has assessed and collected $13.6 million in fines from health plans and consumers have recovered $870,000 in medical expenses.
The Department of Insurance estimates that it has collected $4.6 million in fines and returned $800,000 to consumers.
The settlements are on average less than $10,000 (Tayefe Mohajer, AP/Ventura County Star, 3/10).
Possible Reasons for Low Participation
Assembly member Hector De La Torre (D-South Gate), chair of the committee, argued that state regulators did not conduct sufficient outreach to inform policyholders about the settlements (Capitol Weekly, 3/11).
Jerry Flanagan, a health advocate for Consumer Watchdog, testified that the settlements also might not be accessible or appealing to many consumers. He noted that consumers cannot hire lawyers for the arbitration process and must prove that any health expenses incurred were "medically necessary."
In addition, Flanagan argued that the new coverage offered through arbitration often was less comprehensive than consumers' original policies (AP/Ventura County Star, 3/10).
Both Liang and De La Torre called for state regulators to improve their efforts to inform policyholders about the settlements.
Liang also recommended offering set payments to all consumers whose coverage had been rescinded, rather than continuing to use the arbitration process.
Health insurers criticized the proposal, arguing that it would reward those who knowingly misrepresented their medical history when filling out insurance applications (Capitol Weekly, 3/11).
The Assembly panel is expected to meet with state regulators again to recommend new policies designed to curb coverage rescissions (AP/Ventura County Star, 3/11).
The state's Department of Insurance said it will release new rules in May outlining on the process that health insurers must follow before they can rescind a consumer's insurance policy.
DMHC has said it will not adopt new rules, noting that it already has sufficient policy guidance from the recent settlements (Capitol Weekly, 3/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.