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February 17, 2008

Bill Targets California Health Insurance Cancellations

Spurred by complaints that Blue Cross of California and other health insurers cancel patients' policies after they get sick, a Southland lawmaker has introduced legislation that would require state regulators to sign off before carriers drop policyholders for allegedly failing to disclose preexisting medical conditions.

Assemblyman Hector De La Torre (D-South Gate) said his bill was prompted by recent letters from Blue Cross to physicians asking them about new patients' health issues that could be used as a reason for canceling insurance coverage.

De La Torre said his bill was needed because insurance companies "were not intending to abide by the spirit" of a law he wrote last year prohibiting carriers from refusing to pay medical bills for previously authorized services.

"We all agree that if someone is lying and doing willful misrepresentation, then they should not be insured," the assemblyman said. "But the insurance companies should not be taking premium dollars from someone and dumping them."

Health insurance companies contend that weeding out people who may not have been forthright when they applied for coverage is an essential part of keeping treatment costs under control.

"We need to make sure that the process for application, rescission and cancellation is fair," said Christopher Ohman, chief executive of the California Assn. of Health Plans. "But we also want to make sure that the millions of people who do the right thing aren't left paying for the relatively few who don't."

Ohman's association represents 40 health maintenance organizations and preferred provider organizations covering 21 million enrollees in California.

Ohman said his group's members were "analyzing the implications" of De La Torre's bill.

The assemblyman's bill is the latest in a series of legislative, regulatory and legal actions in California in response to aggressive efforts by insurers and health maintenance organizations to drop patients who hold individual policies after they've filed claims.

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Posted by healthinsurance at February 17, 2008 06:41 PM

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