News
Congressional Committee Reports It Is “Fairly Common” for Health Plans to Cancel Coverage Retroactively
This story originally was aired on NPR by reporter Joann Silberner, who has been covering health care for a long time.
This is a topic which scares even insured people. They could lose their health insurance because they need it and use it.
Key word: Rescission.
It is important to you and your coverage that you conceal nothing which could be used as a basis for cancellation later, enabling a plan to claim that you represented a risk they could not accurately assess. This is why what insurers do is called “risk management.” They are managing, on behalf of your employer and you, the financial risks of medical problems you may have. By creating an insured pool of people, they can spread the risk. Spreading risk does not mean risk disappears, however. They are careful about monitoring costs individually and by group.
Seek your doctor’s advice about what should be disclosed. Doctors see what patients lose their insurance and which ones don’t at sign-up time.
In tough times, you have to be especially vigilant about keeping your coverage, understanding what it offers and what it does not. Keep your side of the information flow in good order. Should you need to challenge, you will be able to do so far more effectively. You may, however, not know that a condition was important enough to note. That can be used as a basis for retroactive cancellation.
Read on to see what the Congressional counsel to health plans was.
No change in health plan practices is anticipated, according to this story.
“A Congressional committee recently turned its attention to rescission, a practice where insurers retroactively revoke plans to avoid paying high costs.
“NPR reports: “According to a new report by congressional investigators, an insurance company practice of retroactively canceling health insurance is fairly common, and it saves insurers a lot of money. A subcommittee of the House Energy and Commerce Committee recently held a hearing about the report’s findings in an effort to bring a halt to this practice. But at the hearing, insurance executives told lawmakers they have no plans to stop rescinding policies.” (Emphasis added)
“NPR reports: “The process begins after a policyholder has been diagnosed with an expensive condition such as cancer. The insurer then reviews the health status information in the questionnaire, and if anything is missing, the policy may be rescinded. The omission from the application may be deliberate, to hide a health condition that might have made the applicant ineligible for insurance. But sometimes there’s an innocent explanation: The policyholder may not have known about a health condition, or may not have thought it was relevant. The rescissions based on omissions or immaterial conditions incensed many lawmakers.” (Emphasis added)
“The committee’s investigators found 19,776 rescissions from three large insurers over five years, which led to savings of $300 million. “Several lawmakers at the hearing suggested there were things the companies could do right now: They could vet applications when they receive them, rather than waiting until people get sick; they could consider whether something that was omitted was related to a current health condition before rescinding; and they could be more careful to positively identify fraud before rescinding a policy.”
Source: NPR, Hune 22, 2009; Kaiser Health News, June 22, 2009
