Kaiser has announced it is “working with state regulators to develop standards to protect its members from unfair cancellations of health insurance, a move that the state’s largest HMO hopes could lead to industrywide reforms.”
This may be in response to a member’s lawsuit. As the Times reports, this is a break with other major state insurers:
Other health plans, including Blue Cross of California and its rival Blue Shield, are fighting regulators and former policyholders for the right to rescind coverage when medical information relevant to the policy-granting decision is left out of an application — even if the omission is an honest mistake or the result of a foggy memory or poorly worded question.
This controversy involved individual health coverage, rather than group (employer) plans. It has led to a rash of lawsuits and horror stories about people who answered the insurer’s pre-enrollment questions in good faith and paid their premiums on time, only to be denied treatment when its urgently needed. Not only is it a potentially a bad-faith issue, but it may violate California law. (Kaiser is based in California.)
Unfair cancellations are a major impetus for widespread health reform, including universal coverage. So are the obstacles people face when trying to get new coverage while suffering from ongoing health conditions, however minor. (The wonk term for this issue, in case you haven’t heard, is portability.) The Times addressed that issue in a separate piece.
In the current political climate, health insurers continue these practices at their own peril. Even from a purely pragmatic point of view, Kaiser’s on the right track.
