Health reform legislation seeks to eliminate practices used
by insurance firms known as "rescissions," which firms defend as
fraud control. The Washington Post reports in a story headlined "When Your
Insurer Says You're No Longer Covered."
"Rescission, the technical term for canceling coverage on grounds that the company was misled, is often considered among the most offensive practices in an insurance industry that already suffers from a distinct lack of popularity among the American public. Tales of cancellations have fueled outrage among regulators, analysts, doctors and, not least, plaintiffs' lawyers, who describe insurers as too eager to shed patients to widen profits."
"Those sentiments have become central to the health-care debate. ... Each of the bills pending in Congress would prevent insurers from rejecting clients because of preexisting conditions. No one claims to know how often policies are canceled -- in large part, congressional investigators say, because insurance companies are regulated by a patchwork of state laws and policies. But the practice is common enough to spur lawsuits and state regulatory action" (Vick, 9/8).