California's Rescission Issues and Their National Implications
The rescission story in California was back in the headlines this recently as Los Angeles city attorney Rocky Delgadillo filed a lawsuit against Blue Shield of California. The suit alleges that the insurer illegally rescinded the policies of more than 850 policyholders since 2002, according to a story in The Los Angeles Times. The suit alleges that the insurer has made their forms complicated and confusing in order to trick customers into omitting information or making mistakes that can be used against them later in order to remove or rescind their coverage, and seeks over one billion dollars in fines and penalties.
A representative for Blue Shield called the suit "a cheap political stunt" that is totally "without merit." The representative claims that they rarely cancel policies and that their forms are made in such a way to combat fraud, which doesn't seem unreasonable to me, at least.
The Times article used the example of a local couple who had their policies rescinded after the company found out that the husband had high cholesterol. His "failure to disclose" this fact led the insurer to cancel the couple's coverage outright. This and many other examples were cited as to why Blue Shield of California needs to pay for its "abusive practices."
Dr. Frankenstein (yes, that is his real name), president of the California Medical Association said that having health insurance doesn't mean you will "receive health care when you need it," and also said that health insurance companies will look for a way out if and when you actually do get sick, which I personally find rather sobering but honest and realistic.
Building upon this article, an article in the Wall Street Journal entitled, "Insurance Cancellation Questions Could Spread Beyond California," author Jacob Goldstein discusses how the very lawsuit mentioned above -- as well as a hearing by California Congressman Henry Waxman to investigate the rescission issue nationally -- could have national implications for insurers and consumers as well.
Understanding the need to fight fraud, Waxman then countered that "insurers are using technicalities or trumped-up 'misrepresentations' to rescind policies after individuals get sick and accumulate hundreds of thousands of dollars in medical bills." While the health insurance people are claiming this practice is rare, it seems to be gaining enough attention from the press and lawmakers to be given a serious look. It will be interesting to see where these talks and investigations go in the coming months and years.
Other than that, news was on the slow side recently, the above being the only big national issues worth noting. I hope you've enjoyed this installment of the Health Insurance News Roundup, and have a wonderful day.
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