Return to the blog »

Jaw-dropping gall

Posted by: Ella Hushagen on Jun 19, 2009

This week, health insurance executives testifying before the House Subcommittee on Oversight and Investigations demonstrated their willingness to put profits before patients, to the horror of the Congressmen present.

Three executives testified at the Subcommittee's hearing on Tuesday, addressing its revelation that their companies collectively,

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.

Insurance companies have come under fire in recent years for routinely identifying policyholders in the individual market who have expensive health conditions, and then digging back into their medical history to find grounds to rescind their policy. Though insurers insist that they only rescind coverage when individuals omit important medical information from applications for coverage, canceled individuals have stepped forward with stories that undermine that claim. For example, we reported this story in a report last year:

Maria from Connecticut had insurance (a Fortis plan from Assurant) when she went to the doctor with what she thought was a pinched nerve and was diagnosed with non-Hodgkin's lymphoma. Assurant denied payment for the cancer-related bills, saying that she had this condition before she bought her policy, and she should have sought treatment. "If I thought I had cancer the previous month, why wouldn't I have gone to the doctor then? They expected me to be clairvoyant," Maria said.

The abusive practice leaves sick individuals uninsured and uninsurable, with huge medical bills. According to the LA Times, the House Subcommittee investigation revealed 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.

Harsh admonition came from both sides of the aisle. Said Representative Michael C. Burgess, Republican of Texas,

No one can defend, and I certainly cannot defend, the practice of canceling coverage after the fact.

Despite the lashings, the LA Times reports that, in the most stunning moment of the hearing, the executives flatly refused to stop the abusive practice within their respective companies:

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."

Video footage of this is here (minute 4:48 is especially interesting).

The testimony of the industry executives is a baffling throwback to the days before the President and Congress were dedicated to enacting comprehensive health care reform. And, it's a reminder of the need for strong private market regulation. According to the Families USA report, Failing Grades, current law in most states does not prohibit the practice: In 29 states and the District of Columbia, insurers are allowed to deny legitimate claims of policyholders who are up-to-date with their premium payments by digging back years into their medical history and alleging that they failed to disclose, or should have known about, a pre-existing condition. Lest we forget, we need the federal government to step in as a watchdog for health care consumers.