Sacramento, CA — Nurses, consumers, and seniors called on the legislature and the governor today to include a key provision to protect innocent patients in any health insurance cancellation legislation forthcoming in the closing days of the legislative session.
Over the last 5 years, California patients have been plagued by the practice of insurance companies retroactively canceling health insurance coverage after they get sick – so called “rescissions” – leaving patients without health care when they are sick and need it most. Cancelled patients are virtually uninsurable and often hundreds of thousands of dollars in debt while facing ongoing medical treatment.
"RNs see the damage done to patients every day by insurance companies,” said Malinda Markowitz, RN and member of the council of presidents of the California Nurses Association. “Insurance companies should not be allowed to cancel the health care of innocent patients and the legislature should not allow the Governor to water down existing law to benefit his largest contributors."
In 2007, Governor Schwarzenegger’s Administration promised to protect innocent patients from rescission in new regulations. Those regulations have stalled. Now, the governor’s office has drafted legislative language that retreats from that promise and that would weaken existing law. The governor’s bill would repeal the ban on “post-claims underwriting” in Health & Safety Code § 1389.3 which bars health insurers from rescinding or limiting a policy in anyway after a patient gets sick unless the insurer can show that the patient “willfully misrepresented” a material health fact on their enrollment application.
Given the extreme hardship placed on patients whose coverage has been retroactively cancelled, the groups said it is critical that any legislation approved by the legislature and signed by the governor includes a clear and unambiguous requirement that only patients that “willfully misrepresented” their health history on their enrollment application can be rescinded.
"Too many Californians discover that the insurance they counted on isn’t there at the very time they need it. We need strong legislation to make insurers honor the policies they issue and to protect patients unless they willfully misled their insurance company," said Gary Passmore, Director of the Congress of California Seniors.
Currently insurers cancel coverage when patients get sick citing so-called "omissions" on a patient’s enrollment application – induced by the intentionally vague and misleading questions on the applications – regardless of whether patients intentionally misrepresented their medical histories as the law requires.
“Insurance should be something that you can count on,” said Don Ernst, President of Consumer Attorneys of California. “Health insurance companies are failing to live up to their promises: broken promises equals broken people.”
On numerous occasions Governor Schwarzenegger has promised to protect innocent patients from rescission of health insurance policies:
• “[It is] outrageous that innocent patients have to live in fear of losing their health care coverage. I look forward to working with my partners in the Legislature to ensure this egregious practice is stopped." Dorsey Griffith, Sacramento Bee, “Patients gain a victory; Insurance reinstated for some; thousands more get reviews,” April 18, 2008.
• “As I’ve said before, patients should not live in fear of unfairly losing their healthcare coverage when they need it most – and I look forward to working with the Legislature to ensure this egregious practice is put to an end.” Lisa Girion, Los Angeles Times, “State fines 2 health plans over canceled coverage; Anthem Blue Cross and Blue Shield agree to offer new policies,” July 18, 2008.
• "Until we achieve comprehensive healthcare reform, stopping unfair healthcare rescissions is an urgently needed consumer protection. This terrible practice further illustrates the erosion of our healthcare system and the need for comprehensive healthcare reform. Today we are standing up for consumers by putting an end to a deplorable practice, and I will continue working with my partners in the Legislature to stop unfair healthcare rescissions once and for all." Lisa Girion, Los Angeles Times, “Bonuses for cutting coverage is banned,” July 23, 2008.
In his State of the State address this January, Schwarzenegger recounted the story of a San Diego man whose insurer rescinded his coverage after he was diagnosed with lymphoma. In his speech, Governor Schwarzenegger said:
The insurance company then went back through all his records looking for a reason to cut him off. They pointed to a minor knee problem unrelated to the cancer. They noted that he now weighed less than he did when he applied for the insurance.
Well, of course, he did. He was now sick with cancer. But they cut him off.
One month after he got sick, the company cancelled his insurance. Todd died eight months later.
We are taking action so that what happened to Todd will not happen to any other Californian.
Under the Governor’s legislation, Todd would not have been protected because an insurer would be allowed to cancel coverage even though Todd’s weight loss was due to illness, not a “willful misrepresentation.”
"Insurance companies have an unsavory track record of canceling people’s health coverage for illegitimate reasons just when it’s needed,” said Elizabeth Sholes, Director of Public Policy, California Church IMPACT. “Obviously we all have a personal responsibility to be truthful about the state of our health. But corporations have an equal responsibility to honor our mutual contracts. That is simple fairness. For the Governor to betray us by giving the corporation more leeway to wantonly cut people from support when they get sick shows where his moral values lie. And they are not with the people of California.
In December 2006, Consumer Watchdog petitioned the Schwarzenegger Administration’s Department of Managed Health Care (DMHC) for new regulations to clarify existing law regarding rescission. Though draft regulations issued by the Department in 2007 clearly require insurers to show a patient willfully misrepresented a material health fact on an insurance application before a rescission can be carried out, those regulations have stalled.
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