State court puts limits on health insurers' policy cancellations

[Newsjock]

Source: San Francisco Chronicle

Health insurers can't wait until a policyholder is sick or injured to investigate the person's medical history and then abruptly cancel the policy on the grounds that important information was left out of the original application, a state appeals court has ruled.

On Monday, the Fourth District Court of Appeal in Santa Ana called a halt to a practice that lawyers for policyholders claim is widespread. Known as "post-claims underwriting," it has led to numerous lawsuits - mostly unsuccessful so far - and state enforcement actions against insurers.

... The Haileys, who lived in Los Alamitos, applied to Blue Shield in 2000, when Cindy Hailey was starting a new job and wanted better coverage. She said she was confused by the application form and omitted any health information about her husband or their son, and also mistakenly listed her husband's weight at 240 pounds instead of 285 pounds.

According to the lawsuit, the company issued the policy but did nothing to investigate the information until February 2001, when Steve Hailey was hospitalized with stomach problems and submitted a claim for coverage. Blue Shield obtained his medical records, which revealed obesity, hypertension and other health problems. Six weeks later, he was seriously injured in an auto accident and spent more than two months in the hospital.

The day after he was released, Blue Shield retroactively canceled the insurance policy because of the failure to disclose medical information on the application. The company, which had approved surgery for Steve Hailey after his accident, billed the couple for medical costs it had paid before the cancellation.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/26/BALUU4K02.DTL

[murielm99]

1. Quite often, if a state tries to limit an insurance company's

ability to cancel or to restrict an insurance company's actions withing a state, the insurance company will move out of that state or stop writing policies for people in that state.

They take their business elsewhere, harming insured people and taking jobs elsewhere. Their ability to do this has to be stopped at the federal level.

[ThomCat]

8. Agreed. But the federal government won't even consider it

until we change who has power in DC. It's not enough to have democrats in office if they're owned by the insurance industry. We need a lot of real progressives in office.

[caligirl]

15. I could see that in many smaller states with low pop. numbers, they can't afford to leave Ca. $$$.

[Crazy Dave]

2. But I'm sure things will get better when Americans are FORCED...

...to have "mandatory coverage" :sarcasm:

Just like car insurance, the higher a risk you are, higher premiums, higher deductibles, less benefits paid for if at all.

This is what will finally weaken the country to it knees, then they'll break them.

[Frances]

4. Sorry Dave the Wave

but I don't understand your post at all.

[Crazy Dave]

5. No surprise you don't along with millions of other voters

That's what these candidates are counting on.

[ThomCat]

10. It makes perfect sense to me.

If everyone is forced to buy health insurance, but insurance companies can choose how much to charge you and how much benefit you'll actually receive, then the insurance companies will become immensely richer and more powerful. People will be forced to give up large amounts of money to little or no benefit, and the poorest people will be pushed farther down towards destitution. Middle class people will be pushed towards poverty. Something like this has the potential to undermine the budgets of huge numbers of people, and that could undermine our economy.

[bain_sidhe]

13. There are reasons to oppose mandatory insurance

but this isn't one of them, at least as far as our Democratic candidates proposing it go... Both Edwards and Clinton would require insurance companies to take anybody, and charge the same premium to all for the same suite of benefits. It gets back to what insurance is *supposed* to be, before the profit motive kicked into high gear: everybody pays the same amount, so the cost of catastrophic illness is spread evenly among all those who pay in to the "pool."

It's called "community rating" now, I believe.

[Crazy Dave]

16. That is so ridiculous and naive

Privately owned insurance companies answer to shareholders, not politicians. They're already letting thousands of people die every year buy denying them benefits and are not held accountable for it. They will not have a change of heart and they will not lose money on high risk patients by giving them affordable premiums. The candidates who want mandatory health insurance care more about pleasing seven insurance company board members than helping seven million Americans.

Look how mandatory auto insurance already works and say hello to what mandatory health insurance will be like.

[Telly Savalas]

17. So you've peered into the souls of Edwards and Clinton

to see their true intentions?

I could just as easily contend that Kucinich is intentionally supporting the status quo by focusing the Left's energies towards the hopeless cause of his candidacy thereby marginalizing the progressive movement. Of course I don't believe this, but you sure as hell can't point to any actual accomplishments by the man to prove otherwise.

Privately owned insurance companies may answer to shareholders, but to do business they have to follow the law. So if the law eliminates medical underwriting, as proposed by Edwards and Clinton, then they won't be able to deny the applications or jack up rates for those with pre-existing conditions. Denying this simple fact is ridiculous and naive.

[aquart]

14. Yep. It's an awful idea.

[napi21]

3. Well, the stupid ins. cos. asked for that kind of lying!

If you tell the truth, the ins. co. will just turn down your app!

They are in the business of insuring people, and NOT ONLY the perfectly healthy ones!

[TheDebbieDee]

6. "They are in the business of insuring people...."

That's where you are wrong - insurance companies are in the business of collecting premiums while refusing to pay claims as often as possible.

[Vinca]

12. Bingo. It's the insurance company's fiduciary responsibility to make

as much money as possible for their shareholders. There are only 2 ways to make money: hefty payments coming in, meager payments going out. The basic premise makes it impossible for insurance companies to have anything to do with health care. They care about money, not people.

[old guy]

7. Another reason why insurance companies cannot be a part of

health care in this country. I believe all the candidates but Kucinich want to keep them in as major players and to me that is just not going to help the situation at all. Just saying.

[pberq]

9. Exactly - this is the conclusion I came away with after seeing Sicko

http://www.michaelmoore.com/sicko/dvd/

[dipsydoodle]

11. If you refer to our NHS

then there is no such thing as a pre-existing condition other than actually being alive. Babies are covered pre-birth too.

[Laelth]

18. Insurance companies make profit by distributing risk.

But health care should not be risk-managed. Both healthy and unhealthy people ought to have access to medical treatment if they need it, regardless of risk. That's why sane countries have taken the insurance companies out of the equation.

:dem:

-Laelth