Insurance executives stand firm on rescission

Testifying at a House Subcommittee hearing yesterday, executives at three of the largest health insurers in the nation said they have no plans to end the practice of rescission, or cancelling coverage for some sick policyholders who included erroneous information on enrollment forms (Source: “Health insurers refuse to limit rescission of coverage,” Los Angeles Times, June 17, 2009).

When Rep. Bart Stupak (D-Mich.), who chairs the subcommittee, asked Richard A. Collins, chief executive of UnitedHealth's Golden Rule Insurance Co.; Don Hamm, chief executive of Assurant Health and Brian Sassi, president of consumer business for WellPoint Inc. whether they would at least commit their respective companies to immediately stop rescissions except where they could show "intentional fraud," all three answered simply, “no.”

According to an investigation by the House Subcommittee on Oversight and Investigations,  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.

Sassi said rescissions are necessary to prevent people who lie about preexisting conditions from obtaining coverage and driving up costs for others. "I want to emphasize that rescission is about stopping fraud and material misrepresentations that contribute to spiraling healthcare costs," Sassi told the committee.

Responded to the testimony, Rep. Joe Barton (R-Texas) said, "I think a company does have a right to make sure there's no fraudulent information. But if a citizen acts in good faith, we should expect the insurance company that takes their money to act in good faith also."