Schwarzenegger OKs Ban on Rewards for Policy Rescissions
On Tuesday, Gov. Arnold Schwarzenegger (R) signed a bill that bars health insurers from offering financial incentives to employees for rescinding members' coverage or limiting the scope of their coverage, the Los Angeles Times reports (Girion, Los Angeles Times, 7/23).
Under AB 1150 by Assembly member Ted Lieu (D-Torrance), insurers cannot establish performance goals or quotas or offer compensation for rescinding or limiting health coverage (Robertson, Sacramento Business Journal, 7/22).
The Senate and Assembly approved the measure unanimously.
The bill stems from the disclosure that Health Net paid bonuses to employees who rescinded health coverage (Maddaus, Torrance Daily Breeze, 7/22).
According to the Times, Health Net in some years paid an employee based on how many policies she canceled, while in other years her compensation was partly based on the savings to Health Net from the cancellations (Los Angeles Times, 7/23).
Health Net has since reworked its rescission practices, and spokesperson Margita Thompson said the company supports the new law (Torrance Daily Breeze, 7/22).