Governor Schwarzenegger: Do the Right Thing, Sign Assembly Bill 2

"I believe that unfair rescissions are a deplorable practice," wrote Governor Schwarzenegger when he vetoed the bipartisan legislation in 2008 that would end unfair rescissions.

In his State of the State address early last year, Governor Schwarzenegger shared the story of Todd, a victim of rescission. After being diagnosed with lymphoma, Todd, who was covered by his wife's insurance plan, was rejected because "he weighed less than he did when he applied for the insurance." He died eight months later without insurance coverage.

The Governor pledged in his speech that "We are taking action so what happened to Todd will not happen to any other Californian." Yet despite a clear opportunity to right that wrong, he has not taken action and horrific experiences like Todd's continue unabated.

Governor Schwarzenegger once again will have the opportunity to correct this abusive practice by signing Assembly Bill 2.

The insurance industry has made billions of dollars from their practice of rescission -- unfairly canceling health insurance policies with little to no oversight prior to cancellation.

Even if an insured family has been paying their premium on time for years, there are no protections for the consumer. Insurance companies rescind a policy by arguing that a consumer lied or did not provide the adequate information when they applied for health care coverage. There is no oversight of their decision: the insurer acts as judge and jury.

Real stories from individuals and families across California and the nation have shown that insurance companies begin a thorough investigation of a consumer's health history after the patient gets sick. In other words, insurance companies will gladly accept a consumer's monthly payments as long as they are healthy.

Since 2007, the California Department of Managed Health Care (DMHC) has restored coverage for 1,092 Kaiser Permanente consumers, 85 Health Net consumers and 56 UnitedHealth/PacifiCare consumers due to unfair rescissions. At the same time, the California Department of Insurance entered into settlements with Anthem Blue Cross, Blue Shield and Health Net. Even after multi-million dollar settlements with every major insurer in California, the practice of rescission is still left to the discretion of the insurance companies.

For over two years, I have fought to prevent wrongful rescissions by health insurers.

Physicians, patients, consumer advocates and others have been working with me to address this shameful practice. I introduced AB 2 to protect consumers from being stranded by their health insurer and to shift the burden from the consumer to the insurance company.

AB 2 requires that insurance companies get approval from the Department of Managed Health Care or the California Insurance Commissioner prior to rescinding a policy. Most important, the bill requires that a patient keep their coverage while this independent review is performed.

The bill has faced strong opposition from the health insurance industry. In the last days of the legislative session, I battled an army of lobbyists that made AB 2 one of the top lobbied bills in Sacramento.

As Consumer Watchdog noted, "Without AB 2, insurers will continue to rescind coverage even if patients honestly filled out their application for coverage."

The California Medical Association wrote, "Despite hopes for health care reform at the federal level, we simply cannot and should not wait for the federal government to act on this issue. California has the opportunity to be a leader and set the bar for how states can reign in this despicable practice."

Outrageous examples of rescissions abound. Individuals who have been diagnosed with cancer are notified that their coverage is rescinded just when they need it the most. New mothers have been told that they and their baby no longer have coverage even after receiving prenatal care. In California, there are nearly 1,000 rescissions each year -- 1,000 people and their families who experience serious medical conditions while battling their health insurer instead of their illness.

In Washington, DC earlier this summer, top executives of the three largest insurers - UnitedHealth's Golden Rule Insurance Co., Assurant Health and Wellpoint Inc. - appeared before the Congressional Subcommittee on Oversight and Investigation and testified that they will not confine the cancellations to those consumers who commit intentional fraud.

During the hearing, the three companies were shown to have canceled the coverage of more than 20,000 people, which allowed the insurers to avoid payment of more than $300 million in claims over a five-year period. In fact, several insurance companies gave bonuses to employees based on how many claims they avoided through rescission. This is the very definition of putting profits before people.

Even Republican Congressmembers blasted the insurance companies. Congressman Joe Barton (R-Texas) stated, "I understand that there is a rule of reason, but again, if somebody inadvertently omits something or there is something that is not material to the claim, that claim in my opinion should be paid, end of story."

California can lead the nation once again by removing the insurance industry's power to impose a death penalty on health insurance coverage and the care it is supposed to provide. If Governor Schwarzenegger fails to sign AB 2, your coverage will continue to depend on the sole judgment of insurance companies when you or your family members get sick.

Comments

[bennet]

Great post Hector! HP Readers keep your eyes on Hector because he is a rising star in CA politics.

[FredGibingus]

Well said, Mr. De La Torre! California is lucky to have you. And good luck to you in your campaign for California Insurance Commissioner in 2010.

[justobserve]

It's incredible that this situation is left to run all over the country. The health care insurance is really sick to make profits on people's lives like this. But politiciams are doing nothing! They are in the pockets of the industry to do anything to break it's monopoly stranglehold on people's lives. It's sickening! I had hoped Obama's and Dem's majority will be enough to do something about but it looked like they are in it half-heartedly too! The more this debate going on, the more I despair! Above all, Obama supports a mandatory insurance saying it's like car insurance!!! How much do we pay for car insurance, a thousand, compared with health insurance, in the tens of thousands? People are going bankcrupt due to health care costs, not car costs! That 's how bad it is that the health insurance take a big chunk out of their income then they are not so sure if the insurers would cancel their insurance or wouldn't approve their needed treatment until they die.. They have made billions for so long that they forget what it's like to be just a middle class person who works hard, pays premium but dies without treatment.­Do Obama and the Dems understand their rare win over the Republicans an expression of people's desperation for a meaningful change? Do we, the poor mass, ever get out of the clutch of the greedy Corporate America?

[mommadona]

You assumes he gives a damn.

If you are truly serious about GOVERNING the state - you would have already started impeachment proceedings - this dynamic nutball has done more damage to this state than Gray Davis could even think up in a life time.

He has robbed us blind.

Impeachment now.

[BarryS]

doesn't go far enough: should make recision a crime: to wit if the patient dies because of lack of care, premeditated murder. In other cases, same as torture. and make all officers, and BOD members equally and severally liable. Then, there is no reason to ban recisions, the insurance companies "will do the right thing" all on their own.

[Merg]

WOW, I love what you are saying. The Private Insurance industry DOES INDEED commit premeditated murder with rescissions. It is High Time it was called out for the malicious crime that it is. Where are the lawyers who want to make a name for themselves to agressively go after the perpetrators of this kind of MURDER.

[r3768]

This is a no brainer and the Gov's actions will tell us a great deal. Sign it! Pass it! And the put it in Gold for all the nation to see! We don't need the Feds to tell us what is right!