Insurance Execs Defend Rescission: Get Sick, Lose Insurance

In our discussion of health care this week, Tim Higgins mentioned that "No one can be refused health care based on ability to pay."

Maybe not (although my wife tells me a hospital denied her cousin an appointment for her daughters when she couldn't show she could pay). But insurance companies can certainly refuse to provide the service you've already paid them for. Even with the sword of Obamacles hanging over their heads, health insurance execs have the gall to to stand before Congress and straight-faced defend the practice of rescission—i.e., axing sick policyholders to save money. From the LA Times, via Crooks and Liars:

An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.

It also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were targeted for rescission and that employees were praised in performance reviews for terminating the policies of customers with expensive illnesses.

Heck of a busines model they have there, providing a service only to people who don't use it, then yanking coverage from paying customers who need it.

Now the insurance companies can justify rescission if an policyholder is committing fraud, such as deliberately withholding information about previous conditions. But the insurers are targeting sick people—a.k.a. drags on profit—and turning loose their cadres of lawyers to find technicalities in their arcane policies to yank coverage from folks who are a bit preoccupied with surgery, chemotherapy, and other massive expenses to mount a vigorous legal challenge. One man lost his coverage for not reporting information that his doctor noted in a report but never discussed with the patient himself.

Republicans and Democrats alike expressed due disgust, but the insurance execs remained stunningly recalcitrant:

"I think a company does have a right to make sure there's no fraudulent information," said Rep. Joe Barton (R-Tex.). "But if a citizen acts in good faith, we should expect the insurance company that takes their money to act in good faith also."

Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show "intentional fraud."

The answer from all three executives:

"No."

Rep. John Dingell (D-Mich.) said that a public insurance plan should be a part of any overhaul because it would force private companies to treat consumers fairly or risk losing them.

"This is precisely why we need a public option," Dingell said.

Private insurers don't want anything to cut into their hefty profits. Not fairness, and certainly not competition from a public plan. But I say if their business model can't withstand competition and common decency, it deserves to fail. Let's see that public option, before private insurers can add any more insult to injury.