Kaiser Permanente and Health Net are going to be reinstating 1200 policies in CA that were rescinded after policyholders became sick and started to incur large claims. The health insurance companies apparently went looking for minor errors on the previously-approved applications, and used the discrepancies to rescind coverage when it was needed the most. I would love to have been a fly on the wall in the rooms when the decision was made to reinstate those policies (1092 for kaiser and 85 for Health Net). Are they doing it to avoid more $9 million lawsuits? Or to bolster flagging public opinion of private health insurance companies? Or because they genuinely want to do the right thing for their policy holders? Or perhaps they’ve been warned by a judge that they can either reinstate the policies on their own, or be court ordered to do so at a later date.
Whatever the reason, I’m sure that the people whose policies were rescinded will be glad to hear the news. Of course by now, some of them may have found other alternatives and might want nothing to do with their previous carrier. Some might have died because they lost access to health care. But because of pre-existing condition underwriting guidelines, many of those people are likely still without health insurance. Kaiser is going to offer their former policy holders an option to buy individual coverage without medical underwriting, and the clients will also be eligible to get reimbursement for up to $15,000 in medical expenses incurred while the coverage was suspended. There are undoubtedly lots of people with claims that were far in excess of $15,000 – since the policy rescissions tended to happen when members started to incur large claims – and those people will have access to an arbitration panel to try to resolve the disputed claims issues.
I’m curious to see how the situation in CA will affect our health insurance industry practices here in Colorado. I firmly believe that health insurance companies should do their homework before approving a policy, and that once a policy is issued by the insurer and accepted by the member, it should be a binding agreement. I know that would cost the health insurance companies more money on the front end, so it’s not a likely scenario. But I’m sure that health insurance carriers all over the country will be using a little more caution in future when they decide to rescind a policy.
