A couple of days ago the L.A. Times reported the agreement by Kaiser and Health Net to reinstate health insurance coverage for about 1,200 individuals whose individual policies had been cancelled by those insurers.
The article suggests that the Health Net and Kaiser settlements do not provide a remedy for past unpaid medical expenses for their insureds. They simply provide coverage for prospective care. The insureds have the option to bring or maintain suits that have already been brought to recover past expenses incurred and for which the insurers argue they are not responsible.
Regular readers of this blog will know this is a recurring interest of mine. I follow developments in California closely for several reasons. I have seen many individuals stung by the retroactive cancellation of their insurance policies in my own practice. The basis for these policy rescissions is often flimsy and invariably results from the submission of large medical expenses to the plan in the first few months after a policy has gone into effect. The result of cancellation of a health insurance policy when an individual is facing large medical expenses often has catastrophic financial consequences for families.
Certainly there are circumstances, such as when an applicant consciously lies about his health history, when insurers should be allowed to rescind coverage. But when insurers simply wait until claims come in to undertake competent underwriting of an application for a policy, they should be prevented from cancelling those policies. And, as we’ve seen with many large health insurers in California, that happens with regularity.