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Tuesday, September 21, 2010

Rescissions: Just plain wrong

In 2006 a Southern California couple who had purchased health insurance from Anthem Blue Cross had their coverage rescinded after using their benefits to cover a cardiac procedure.  Several months after the procedure, Blue Cross retroactively canceled the couple’s coverage and left them with a six-figure medical bill.  When consumers get sick, insurers sometimes try to avoid having to pay for their care through rescissions--the process of yanking coverage away, right when patients need it most, as though they were never covered at all. To add insult to injury, the patients find themselves not just uninsured, but uninsurable (due to pre-existing conditions), and awash in medical debt. 

Over the last decade, thousands of others experienced the same treatment from Anthem Blue Cross and other insurers. Anthem Blue Cross had sent letters urging doctors to turn in patients who had misrepresented their health status on their insurance questions; HealthNet was found to provide bonuses for employees for rescinding patients. In California, this led to significant media attention, class-action lawsuits, legislative hearings at the state and federal level, and state regulators negotiating multi-million dollar settlements with the insurers who agreed to change their behavior

California has adopted new state laws and regulations, and the new federal health reform law has provided the final word. The Patient Protection and Affordable Care Act definitively codifies, in federal law, the fact that this practice is wrong and illegal.  Effective September 23, 2010, the law prohibits insurers and plans from rescinding coverage – for individuals or groups of people – except in cases involving fraud or an intentional misrepresentation of material facts. Insurers and plans seeking to rescind coverage must provide at least 30 days advance notice to give people time to appeal.

Eliminating rescissions is one more way that the new federal health law ensures that our coverage will be there for us when we need it.

 

This post was written by Health Access California, a statewide health care consumer advocacy organization, advocating for the goal of quality, affordable health care for all Californians.