regulators and legislators take charge. Legislators in California are well on the way to passing a law that would severely restrict health plans’ ability to cancel members’ coverage, a law that would supersede internal guidelines and policies.
Over the last five years, about 700 individual policies have been canceled under these internal guidelines, with members having little in the way of formal recourse. The press has publicized some of the more egregious cancellations, where individuals with serious health problems had policies cancelled because they did not document minor health issues that occurred years before the application was filed (conditions unrelated to the member’s current health problems) .
Even more egregious, at least one payer evaluated, and bonused, a manager in part on her ability to find policies to cancel.
There are actually two bills (which may be merged), one that requires all cancelations be approved by a third party; the other would give health plans a maximum of six months from the date of issue to review patients’ policy applications. While many bills are offered, few are passed – but that doesn’t look to be the case here; one of the bills has already passed out of the Health Committee on a unanimous vote.
If these bills, or something like them, are passed and signed into law, it may well make it more difficult and expensive to underwrite individual health insurance in the state. It may make it harder to obtain health insurance.
But these bills never would have come about if certain insurers hadn’t crossed the stupid line. Here’s hoping other insurers in other states watch and learn.
Apr
11
It seems like a good law. I don’t know exactly conditions of US health insurance companies, but the possibility to cancel policy in such way seems at least – strange. I am dealing with Life insurance in Canada but we have also health insurance as a side product, but private health care covers only about 30% of health expenses in Canada, rest is covered by public health care, so we are in different position.
Several Midwestern states have had ‘post-issue’ underwriting laws for many years. They were passed because companies were refusing LTC claims for unreported health issues years after the policy was issued. Now companies can only rescind if there was a material misrepresentation. If the company didn’t get medical records…that’s the carrier’s problem if there isn’t a misrepresentation.
It hasn’t been an excessive burden for underwriting and has actually kept rates down.