Health-insurance loopholes

Barbara Shelly’s column “The bills came, and his coverage vanished” (7/12, Opinion) on the medical insurance industry’s practice of taking advantage of and abandoning the sick when they are most vulnerable was an eye-opener.

That insurance companies save money for themselves and increase profits for the hospitals is no surprise. How they do it is beyond contempt. Ambushing the insured, knowing they are not medical professionals and waiting for them to slip up is cowardly and disingenuous.

Rather than ask the public to use complicated application forms, the insurance companies should use copies of the client’s medical records. That would give them all the information they need and close the loophole they use to dodge expensive payments. But that would be fair, and apparently “fair” is not in their vocabulary.

George Cook
Riverside

Comments

[whispering_to_kc]

"... the misrepresentation has to be "material" to the risk or the loss ..."

No, the "misrepresentation" does not have to have anything to do with the eventual medical problem at all. The company can deny claims for lung cancer because of undisclosed sunburn treatment.

Insured people who get ill are routinely canceled out of their health insurance on any history omission or mistake at all, intentional or material or not.

Health insurance rescission is only about saving the corporation a few bucks. Sometimes, a lot of bucks.

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"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."

http://www.latimes.com/business/la-fi-rescind17-2009jun17,0,3508020,full.story

[Gary]

Marcnts, you're simply wrong about that. No other way to put it. Among other requirements, the misrepresentation has to be "material" to the risk or the loss.

[Marctnts]

"The obvious best way to avoid policy rescission is to not lie about your health history on the application for health insurance."

Sorry, Gary, but I've got agree with the letter writer on this one. For a healthy person, one little hiccup listed as a notation in your records (which may have happened years ago and even without your knowledge) is often enough to rescind your coverage and leave you holding the bag.

Here's my proposal. Insurance issuers get 6 months from the inception of the policy to review declarations and determine whether they wish to continue coverage. If no action is taken in that 6 months, the policy is considered full and valid.

[Gary]

George, perhaps you are not aware that "complicated application forms" are never used until they have been reviewed and approved by state insurance departments. The obvious best way to avoid policy rescission is to not lie about your health history on the application for health insurance.