Today, the Energy and Commerce Subcommittee on Oversight and Investigations held a hearing on the termination of individual health policies by insurance companies, including the controversial practices of “post-claims underwriting” and the “rescission” of coverage after policyholders become ill.
The committee conducted a year long investigation into problems with the individual health insurance market and found, among other alarming issues, that in the last five years 20,000 individual insurance policyholders have had their policies rescinded by the three insurance companies who testified today. The investigation also uncovered that at least one insurance company evaluated employee performance based in part on the amount of money its employees saved the company through retroactive rescissions of health insurance policies. A document obtained by the Committee showed a WellPoint official was awarded a perfect score of 5 for “exceptional performance” based on having saved the company nearly $10 million dollars through rescissions:
Chairman Waxman explained how the market for individual health insurance in the United States is fundamentally flawed:
One of the biggest problems is that most states allow insurance companies to deny coverage for people with preexisting conditions. So if you lose your job, and you can’t qualify for a government program like Medicare or Medicaid, it’s nearly impossible to get health insurance if you are sick or have an illness.
This creates a perverse incentive. In the United States, insurance companies compete based on who is best at avoiding people who need life-saving health care. And this incentive manifests itself in a wide range of controversial practices by the insurance companies.
When people with individual policies fall ill and submit claims for expensive treatments, some insurance companies launch investigations. They scour the policyholder’s original insurance application and the person’s medical records to find any discrepancy, any omission, or any misstatement that could allow them to cancel the policy.
They try to find something – anything – so they can say that this individual was not truthful. It doesn’t have to relate at all to the medical care the person is seeking, and often it doesn’t. You might need chemotherapy for lymphoma, but the insurance company can cancel your coverage because you failed to disclose your gall stones.
It may come as a surprise to most people, but the insurance companies believe they are entitled to cancel policies even when these omissions or discrepancies are unintentional. They believe they have the right to cancel policies even when someone else, like the agent who sold their policy, was responsible for the discrepancy in the first place. In addition, they can terminate coverage not just for the primary policyholder, but for the entire family, including innocent children who did nothing wrong.
Subcommittee Chariman Stupak opened the hearing:
“The companies who engage in these rescission practices argue that they are entirely legal, and to a large extent they are. But that goes against the whole point of insurance. When times are good, the insurance company is happy to sign you up and take your money in the form of premiums. But when times are bad, and you are afflicted with cancer or some other life threatening disease, it is supposed to honor its commitments and stand by you in your time of need. Instead, some insurance companies use a technicality to justify breaking its promise, at a time when most patients are too weak to fight back.”
In May 2008, I went to the dermatologist for acne. A word was written on my chart and interpreted incorrectly as meaning pre-cancerous. Shortly thereafter, I was diagnosed with Invasive HER-2 Genetic Breast Cancer, a very aggressive form of breast cancer. I was told I needed a double mastectomy. When the surgeons scheduled my surgery I was pre-certified for my two days hospitalization. The Friday before the Monday I was scheduled to have my double mastectomy, Blue Cross red flagged my chart due to the dermatologist report. The dermatologist called Blue Cross directly to report that I only had acne and please not hold up my coming surgery. Blue cross called me to inform me that they were launching a 5 year medical investigation into my medical History and that this would take approximately 3 months.
..After being diagnosed with invasive breast cancer in June 2008, I was placed back on the surgeons list to get my Mastectomy. I finally received the surgery on October 2, 2008. My tumor grew 2.3 cm to 7 cm also; I had to have all my Lymph nodes removed due to waiting from June to October 2. I am still undergoing chemotherapy every three weeks. Cancer is expensive and no one wants to help. I pray with all my heart that no one has to go through the sheer agony that I have endured for 1 year. I did not deserve to have my insurance cancelled. Blue Cross set out to get rid of me. Blue Cross searched high and low until they found enough to get rid of me. I pray that someone will listen to my story and help people like me who are powerless against big insurance companies.
When Blue Cross cancelled my coverage, I had no idea what rescission meant. But now, after my life has been turned upside down for the past four years, Ive come to understand what a despicable practice it is. Insurance companies require you to fill out an application that is deliberately confusing. And, they don’t do anything to make sure you understood the questions, or that you supplied all the information they need to decide whether they want to insure you or not. They just accept you, and accept your premium checks. Its after you see a doctor that everything changes. When your doctors file claims, the insurance company starts looks for reasons not to pay them. They dig through your medical records and compare what they find to the information you put down on the application. Its called post-claims underwriting. And, in California, where I live, its illegal. But insurers ignore the law. And when they find a discrepancy or an omission, they rescind the policy, and refuse to pay any of your medical bills even for routine treatment, or treatment they previously authorized…
The worst part about my rescission is that I have been unable to get insurance anywhere else. I applied for individual insurance through Blue Shield. But on their application, they ask if the applicant has ever had insurance rescinded. When they learned that I had, they informed me that they would not accept me for coverage. Every insurance company asks if you've ever had health care coverage rescinded. For the rest of my life I will never be able to get individual coverage again because of Blue Cross.
…If insurance companies are not prevented from canceling or restricting coverage after patients get sick, insurance policies are not worth the paper they are printed on. Insurance companies are making record profits by collecting premiums in exchange for the promises they make to be there when people need them. Make them keep that promise.
My brother was told he was canceled during what they called a “routine review” during which they claimed to discover a “material failure to disclose”. Apparently in 2000 his doctor had done a CT scan which showed an aneurysm and gall stones. My brother was never told of either one of these conditions nor was he ever treated for them and he never reported any symptoms for them either. After months of preparation, the stem cell transplant could not be scheduled. My brother’s hope for being a cancer survivor were dashed. His prognosis was only a matter of months without the procedure.
When I called the hospital to see if I could schedule the stem cell transplant for him I was callously told “unless your brother brings in cash, he is not going to get the procedure without insurance.”
…What the Fortis Insurance Company did was unethical. To deny a dying person necessary medical treatment based upon medical conditions a patient has never had knowledge of, never complained about or never been treated for is cruel.
Read Peggy Raddatz’s full testimony>>
Chairman Stupak questions the health insurance CEOs testifying:
The Energy and Commerce Committee will begin hearings next week on legislation to reform our health care system. As Robin Beaton testified, “this is America and we deserve good Health Care.”