Critics Say Insurers Cutting Sick People Loose

By Harry Kimball,  Newser Staff
Posted Sep 8, 2009 4:45 PM CDT
Protesters including members of Health Care for America Now and other organizations call for a public health insurance option during a demonstration outside an Independence Blue Cross building.   (AP Photo)
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(Newser) – Insurance companies are being hit from all sides on at least one issue—in industry jargon, it's called rescission. In the real world, it's when insurers cancel coverage because they say a customer has lied to them about a preexisting condition or some other issue. It's not clear how many such cancellations occur, but judging by the number of lawsuits filed by people suddenly facing staggering medical bills without coverage, it's a sizable number, reports the Washington Post.

Insurers say rescissions are necessary to curb fraud. Clients say it's just another way they get the shaft. For one thing, insurers don't vet customers for violations until after a claim is filed. “Costco doesn't let me take something back after 90 days,” says the president of the California Medical Association. “If they want to investigate, let them do it within 90 days.” Others say honest mistakes of admission occur because insurers' applications are so complex. The situation has fueled such outrage that all of the reform bills under consideration would end the practice of screening for preexisting conditions.