Health Reform: Health Insurers to Ban
Dropping of Sick Customers

 

Health-insurance customers won’t risk losing their coverage when they become sick under an industry-wide ban that began in May on the practice known as “rescission.” It was common practice on the individual market to closely examine a member’s application for any error or omission if they had expensive claims (i.e., got seriously ill or injured) and then cancel the policy. The companies are saying they will no longer cancel customer policies without evidence of fraud or intentional misrepresentation. The health law signed by President Obama in March would have required insurers to stop all rescissions in September.

This is the second time that health-insurance companies have opted to act before the law’s requirements and implement new regulations from the health care overhaul. Earlier in April, insurers announced that they would immediately begin a policy letting dependents under the age of 26 stay on their parents’ plans.

The companies have done so partly at the prodding of Democrats in Congress and the Obama administration. On April 27, Democratic chairmen of three House health committees wrote a letter asking the insurers “to end any such abusive practices immediately.”

The White House applauded the move. “It’s heartening to see that the insurance companies who employed these terrible practices -- and fought reform -- are coming around doing the right thing by instituting the ban right away,” Nancy-Ann DeParle, director of the White House Office of Health Reform, said in an e-mailed statement. “We’ll be watching closely and holding them to their word.”

Cigna Corp’s Tom Richards, senior vice president of U.S. products, said in a statement that when the company does go ahead with a rescission because of fraud or “intentional misrepresentation,” it will have a third party review the decision.

-From “Health Insurers to Ban Dropping of Sick Customers (Update1)” April 29, 2010, 2:40 PM EDT, (Adds Cigna Corp. announcement), by Drew Armstrong, Editors: Angela Zimm, Andrew Pollack, (Bloomberg), http://www.businessweek.com/news/2010-04-29/health-insurers-to-ban-dropping-of-sick-customers-update1-.html, retrieved 4/30/10. Cited in/linked from: “ HEALTH CARE WEEKLY UPDATE”, fromBarbara Roop & John Goodson, Health Care for Massachusetts, April 30, 2010.

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