Daily News Updates - Health Insurance News

Rescissions Decisions – Have you been dropped lately?

The Kaiser Daily Health Policy Report has posted an article covering a little-discussed problem that has a great impact on many people. That is, being dropped from health insurance coverage, sometimes called Rescission. The report describes how widespread this problem has become. The practice of rescinding and canceling health insurance coverage is so widespread that it is being "scrutinized from California to Connecticut”, as the Arizona Republic puts it. The problem has gotten so serious that some states are having to pass tough legislation or, at least, conduct state regulatory actions. Fines are even being assessed in order to deal with “retroactive health policy voids”. The Republic reports that many complaints are being lodged to government regulators concerning rescissions. Lawsuits are being filed stating that health insurance coverage is being “improperly dropped”.

The contention is that the health insurance is being dropped after a patient is “diagnosed with a costly life-threatening illness, such as cancer.” The post hoc is the timing; as soon as one event happens, the next one closely follows. To the lawyers and patients, this is too suspicious. Countering, the health insurers contend that they need this escape for those who deliberately withhold critical information concerning medical history or other important information. That justification may likely be scrutinized by the inevitable hearings that are soon to follow. A more suspicious justification though, is the reasoning that this practice “helps maintain and reduce costs for all beneficiaries.”

The Republic has named a few companies who have been suspect in the past. There is currently litigation over rescissions in both Arizona and California against an insurer named Health Net. The cases still pending, legislators are pushing for more strict regulations on this issue. In California, the Department of Managed Health Care investigated both Health Net and Kaiser Permanent causing them to reinstate 1,000 of their clients who had been wrongfully dropped. In the future, Health Net has decided they will no longer drop people without third-party approval. In New Mexico, a new bill has been signed into law that forces insurers to provide proof if insurance fraud before they are allowed to drop a policy. Not much has been done in Arizona on this issue because their officials feel that legitimate cases are too rare.