Draft Rules Won't Stop Insurers' Illegal Cancellations of Healt... ( Rules Compound Problems With Gove...)

Draft Rules Won't Stop Insurers' Illegal Cancellations of Health Policies

Date:10/23/2007

Rules Compound Problems With Governor's Mandatory Health Insurance Plan

SANTA MONICA, Calif., Oct. 23 /PRNewswire-USNewswire/ -- Draft regulations released today by the Schwarzenegger Administration fail to protect patients from illegal cancellation of policies and allow insurers to decide which policies to cancel without prior review by independent regulators, said the Foundation for Taxpayer and Consumer Rights (FTCR). FTCR said that the weak cancellation rules add to problems with legislation supported by Governor Schwarzenegger that would require all Californians to buy private health insurance policies.

Following widespread reports of insurers violating the law by canceling coverage on the basis of so-called "omissions" on a patient's enrollment application -- regardless of whether patients "willfully misrepresented" their medical histories as the law requires -- FTCR called for new regulations requiring insurers to get approval from regulators before canceling a patient's coverage.

"Insurers who have a profit motive to cancel coverage cannot be trusted to make fair decisions about which policies to cancel. The burden should be on insurers to prove to independent regulators that a cancellation is justified, not on patients who don't have the time or energy to fight for their rights when they are sick and fending off collection agencies," said Jerry Flanagan of FTCR. "The rules will result in more litigation because patients will be forced to go to court when regulators fail to prevent illegal cancellations of coverage."

FTCR said that due to the overwhelming financial incentive for insurers to revoke coverage when patients rack up medical bills, the draft regulations must be amended to include an independent review by regulators before, not after, insurers rescind coverage. When policies are cancelled, patients are left uninsured, uninsurable and often in deep medical debt.

Download the draft rules at:

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