SACRAMENTO, Calif., Sept. 26 Consumers whose health insurance policies were cancelled after they got sick urged Governor Schwarzenegger today to ignore insurance industry claims that new regulation is not necessary because insurance companies can police themselves. Consumer Watchdog said that a similar promise led to the collapse of the financial industry.
This week, the CEO of the California Association of Health Plans representing insurance companies told ABC that new legislation designed to protect innocent patients from retroactive policy cancellations -- rescission -- was unnecessary because health insurers could regulate themselves. Watch the YouTube clip on the right side of this page: http://www.consumerwatchdog.org/patients/
In the letter to be delivered to governor today (see below), Consumer Watchdog wrote:
"Financial institutions successfully argued for a decade that they were capable of self-policing some of the industry's riskiest practices. The turmoil on Wall Street over the last several weeks has made it abundantly clear that corporations cannot be counted upon to self regulate. Now, health insurers expect you to believe that they can restrain themselves? Years of unfair rescissions have proven that new oversight is necessary to make the health insurance industry honor their contracts with patients."
AB 1945 by Assemblyman Hector De La Torre (D - South Gate) would bar insurance companies from canceling policies unless a patient lied about a health problem when applying for coverage by intentionally misrepresenting or intentionally omitting information on an insurance application. Insurance companies oppose the bill because they want to continue to cancel policies even if patients unintentionally omitted information, or even if they never knew of the information that the insurer claims was omitted from the insurance application.
AB 1945 also bars an insurer form canceling patients for failing to disclose minor conditions that, if known to the company prior to issuing the policy, would not have effected the insurer's decision to grant coverage.
One patient in Sacramento today, Karen Knee of Santa Ana, was rescinded after Blue Cross claimed she failed to disclose a one-time back spasm she had years earlier. AB 1945 would have protected Karen, who didn't intentionally omit the back spasm or misrepresent a health condition that would have prevented the coverage from being granted. The application asked Karen to disclose illnesses and significant health problems, not every ache and pain she had ever had.
Mark Robison of Santa Rosa received a cancellation notice from Blue Cross for failing to disclose his 8 year old son's undescended testicle. Blue Cross had previously paid for treatments for the condition when the family previously had Blue Cross coverage and the condition was recorded in the family's medical records, but there was no indication that it might someday require surgery. The Robison's did not intentionally omit a known health problem because there doctor had told them the condition did not require treatment.
AB 1945 passed the legislature with bipartisan support. The bill was sponsored by the California Medical Association representing doctors and supported by Consumer Watchdog and:
California Nurses Association
AIDS Healthcare Foundation
American Diabetes Association
American College of Obstetricians and Gynecologists, District IX, CA
American Federation of State, County and Municipal Employees (AFSCME)
California Academy of Family Physician
California Chapter of the American College of Emergency Physicians
California Chiropractic Association
California Nurses Association