Health Insurance Rules Aim to Restrict Rescissions in CA

Cheryl Clark, for HealthLeaders Media , August 6, 2010

Insurers will be required to give each applicant for an individual plan, such as spouses, answer separate health history questionnaires "in which each question calls for a separate, identifiable response from each applicant."

Additionally, insurance agents must attest that they helped applicants with their applications.

In the last three years, Poizner has accused numerous health plans of illegally cancelling consumers' policies and reached settlement agreements with companies that represent 85% of the individual market. His office was able to reinstate coverage for 4,000 consumers whose policies were allegedly rescinded illegally, and required that consumers who paid out-of-pocket medical costs during that period be reimbursed.

Anthony Wright, executive director of the consumer group Health Access California, says he prefers that all health plans industry-wide be required to submit the same questionnaire of applicants, "but this would at least allow questionnaires to be vetted for confusing questions or those that would be more of a trap than a legitimate inquiry."

Also, he says, the rules would require health insurance companies to "do some underwriting in the front end, rather than waiting for people to get sick and then doing it on the back end."

Wright says that it's not surprising the state Department of Insurance Commission has taken such action. "Because we have the biggest individual market by far in the country, California has the biggest opportunity for abuse, and we have had the greatest abuse with some of these (insurance company) practices."

For example, two California plans several years ago were accused of launching major investigations of people who got sick and made medical claims, to see if they had lied on their applications, he says.

Since the publicity in recent years regarding unorthodox insurance company practices, Wright continues, rescissions have almost come to a complete halt. In recent testimony in the state Legislature, health plan representatives and others say that there have been only nine in the last year.

But the pressure may eventually die down without these new regulations, Wright says.

Cheryl Clark is senior quality editor and California correspondent for HealthLeaders Media. She is a member of the Association of Health Care Journalists.
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