Sacramento, CA — Consumers whose health insurance policies were cancelled after they got sick urged Governor Schwarzenegger today to ignore insurance industry claims that new regulation is not necessary because insurance companies can police themselves. Consumer Watchdog said that a similar promise led to the collapse of the financial industry.
This week, the CEO of the California Association of Health Plans representing insurance companies told ABC that new legislation designed to protect innocent patients from retroactive policy cancellations — rescission — was unnecessary because health insurers could regulate themselves. Watch the YouTube clip on the right side of this page: www.consumerwatchdog.org/patients/
In the letter to be delivered to governor today (see below), Consumer Watchdog wrote:
"Financial institutions successfully argued for a decade that they were capable of self-policing some of the industry’s riskiest practices. The turmoil on Wall Street over the last several weeks has made it abundantly clear that corporations cannot be counted upon to self regulate. Now, health insurers expect you to believe that they can restrain themselves? Years of unfair rescissions have proven that new oversight is necessary to make the health insurance industry honor their contracts with patients."
AB 1945 by Assemblyman Hector De La Torre (D – South Gate) would bar insurance companies from canceling policies unless a patient lied about a health problem when applying for coverage by intentionally misrepresenting or intentionally omitting information on an insurance application. Insurance companies oppose the bill because they want to continue to cancel policies even if patients unintentionally omitted information, or even if they never knew of the information that the insurer claims was omitted from the insurance application.
AB 1945 also bars an insurer form canceling patients for failing to disclose minor conditions that, if known to the company prior to issuing the policy, would not have effected the insurer’s decision to grant coverage.
One patient in Sacramento today, Karen Knee of Santa Ana, was rescinded after Blue Cross claimed she failed to disclose a one-time back spasm she had years earlier. AB 1945 would have protected Karen, who didn’t intentionally omit the back spasm or misrepresent a health condition that would have prevented the coverage from being granted. The application asked Karen to disclose illnesses and significant health problems, not every ache and pain she had ever had.
Mark Robison of Santa Rosa received a cancellation notice from Blue Cross for failing to disclose his 8 year old son’s undescended testicle. Blue Cross had previously paid for treatments for he condition when the family previously had Blue Cross coverage and the the condition was recorded in the family’s medical records, but there was no indication that it might someday require surgery. The Robison’s did not intentionally omit a known health problem because there doctor had told them the condition did not require treatment.
AB 1945 passed the legislature with bipartisan support. The bill was sponsored by the California Medical Association representing doctors and supported by Consumer Watchdog and:
California Nurses Association
AARP
AIDS Healthcare Foundation
American Diabetes Association
American College of Obstetricians and Gynecologists, District IX, CA
American Federation of State, County and Municipal Employees (AFSCME)
California Academy of Family Physician
California Chapter of the American College of Emergency Physicians
100% Campaign
California Chiropractic Association
California Nurses Association
California Podiatric Medical Association
California Professional Firefighters
California Psychological Association
California School Employees Association
California Society for Clinical Social Work
California Teachers Association
California Public Interest Research Group
Congress of California Seniors
Health Access California
Los Angeles Democratic Party
Osteopathic Physicians and Surgeons of California
Retired Public Employees Association
Women’s Working Group on Universal Health Care
LETTER TO GOVERNOR SCHWARZENEGGER:
Governor Arnold Schwarzenegger
State Capitol
Sacramento, CA 95814
RE: Sign AB 1945 – Health Insurers Can’t Be Trusted to Regulate Themselves!
Dear Governor Schwarzenegger:
The health insurance industry is claiming that AB 1945 (De La Torre)—legislation that would prevent health insurers from canceling patients’ coverage when they get sick and file a claim— is unnecessary because the industry is capable of policing itself.
Chris Ohman of the California Association of Health Plans told ABC in San Francisco this week that “we get the message, the industry needs to do a better job” and that insurers would protect the interests of patients. The industry also believes that it should be allowed to cancel patients even if they unintentionally omit information from their insurance applications. Watch the television clip here: http://www.consumerwatchdog.org/patients/
Financial institutions successfully argued for a decade that they were capable of self-policing some of the industry’s riskiest practices. The turmoil on Wall Street over the last several weeks has made it abundantly clear that corporations cannot be counted upon to self regulate. Now, health insurers expect you to believe that they can restrain themselves? Years of unfair rescissions have proven that new oversight is necessary to make the health insurance industry honor their contracts with patients.
AB 1945 is uncomplicated. It merely provides clarification of what consumer advocates, you and your administration have long said is the legal standard for rescission, but insurers have refused to acknowledge: Patients cannot be retroactively canceled unless they lied about a health condition—intentionally omitting or intentionally misrepresenting health information when applying for coverage.
The new law is necessary because Chris Ohman stated the industry’s intention to continue to rescind innocent patients. Without AB 1945, the settlements with HMOs by your own Department of Managed Health Care won’t prohibit companies from repeating the same reprehensible practice.
Such a clarification would end insurers’ “gotcha” cancellations against innocent patients who never knew of, or never understood, a past medical problem. The bill also establishes a process for patients to avoid going to court by appealing rescissions to an independent review panel.
In your January State of the State address, you promised to protect all Californians from this deplorable practice. You told the story of a self-employed San Diego man whose individual insurance policy was retroactively cancelled. You said:
"Todd had been on his wife’s insurance plan, but after divorce he found a policy with a well-known company. Five months later, he started feeling tired, and soon [found he] had lymphoma.
“Now, the insurance company then went back through all of his records looking for a reason to cut him off. They pointed to a knee problem, unrelated to cancer, and they noted that now he weighed less than he did when he applied for the insurance.
“Well, duh, of course he did, because now he was sick with cancer. But they cut him off. One month after he got sick the company canceled his insurance. Todd died eight months later. We are taking action so what happened to Todd will not happen to any other Californian.”
AB 1945 would have protected Todd because Todd’s weight loss was due to illness after coverage was granted, not an intentional misrepresentation or intentional omission on his insurance application.
Until you sign AB 1945 Californians will still be at risk of losing their health insurance when they are sick and need it most.
Sincerely,
Jerry Flanagan
Carmen Balber
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