Rescinding coverage will no longer be allowed
At the end of June, the Administration issued a series of regulations under the Affordable Care Act to implement a new Patients’ Bill of Rights. The goal of these new regulations is to form stronger consumer protections in the private insurance market and to finally put American consumers back in charge of their health coverage. One of the most egregious insurance practices that will be prohibited is the unfair rescission of insurance coverage after a person has been paying premiums. Rescission is the insurer practice of retroactively canceling a customer’s coverage when they are sick or in need of care, claiming that the customer intentionally omitted information on their application for coverage.
Although insurance companies claim rescissions are very rare, the problem is they typically occur among a more vulnerable population: those with coverage through the private market. Because these individuals are on separate plans, they tend to pay much higher rates and do not have the same kind of leverage as someone in group insurance. Further, the numbers seem to be telling a different story.
There were more than 27,000 rescissions in the U.S. over a five-year period that ended in 2008, according to a December 2009 study by the National Association of Insurance Commissioners. That's an average 3.7 rescissions per 1,000 policies written.
Throughout the battle to pass health reform, many consumer stories had a common thread—coverage was taken away, many times when the consumer needed it most. For example, a woman in Los Angles was told by her insurance company in the midst of chemo-therapy that they were cancelling her policy because they insisted her cancer existed before she signed up for coverage.
And although many of the stories involved heartbreaking tales of consumers whose coverage was yanked away in the midst of an illness, there are just as many families who have experienced a cancellation during times of relative health, leaving them uninsured and vulnerable if someone in their family were to get sick in the future.
Take for instance the story of Nora Kenny, who at the age of eight had an overbite that contributed to her need for braces. When Nora was 15, her parents’ insurance company found out about it, they rescinded her health coverage claiming her parents had intentionally omitted information regarding her health status. In truth, the Kennys never deliberately omitted anything because there were never asked about their daughter’s dental health or even asked for references to her dentist or orthodontist.
Because of the insurance company’s decision, Nora was left without insurance, and her family was left to fight an uphill battle.
Lucky for Nora and her family, she did not become seriously ill during her time without insurance, but not everyone who has been hurt by insurance companies has been so lucky. With the passing of the Affordable Care Act and now the implementation of the Patients’ Bill of Rights we are one step closer to making sure all Americans can feel secure in their health coverage.