On April 14, 1994, the executives of America's seven largest tobacco companies came before Congress and each testified that tobacco was not addictive. The gaffe by the so-called seven dwarfs, which contradicted evidence in the companies' own records, became a turning point in the battle to reign in tobacco companies in the courts.
Yesterday, executives from three of America's largest health insurers defiantly told Congress they would continue to cancel policies for sick patients who did not lie on their enrollment applications, over simple errors on the forms. That inflamed Republicans and Democrats alike, making the best case yet for creating a public alternative to the for profit companies and new legal controls on insurers as a condition of health care reform.
This could be the health insurer industry's "seven dwarfs' moment" if Congress continues to call executives back and face them off against patients injured by their practices. All the back-door meetings on health care reform in Congress have failed to get to the single fundamental truth yesterday's hearing did -- insurance industry tricks devastate the lives of insured patients and there needs to be a public alternative to these companies.
The practice of canceling coverage after a patient becomes sick and refusing to pay big medical bills has come under scrutiny in the courts and legislature in California. The issue made its DC debut yesterday with new evidence. The company documents released by the House subcommittee on Oversight and Investigations show that WellPoint, the nation's largest health insurer, rewarded employees for canceling coverage of sick patients. Employees earned high points on "performance reviews" for retroactively canceling policies -- a practice known as "rescission."
According to documents obtained by the subcommittee, one employee of Blue Cross, a subsidiary of WellPoint, received a perfect score of "5" in a company performance review after saving the company nearly $10 million through policy rescissions. Three insurance companies -- WellPoint, Golden Rule (owned by United Health) and Assurant -- rescinded more than 20,000 policies over five years and refused to pay for more than $300 million in medical expenses.
Wittney Horton of Los Angeles, whose own insurance was canceled after she sought routine medical care, testified yesterday to urge lawmakers to stop insurance companies from canceling or downgrading insurance coverage when patients get sick. Horton represents 6,000 similar victims of Blue Cross "rescissions." Many of these patients faced bankruptcy because WellPoint refused to pay their medical bills.
When Horton applied for coverage with Blue Cross, she filled out the long and confusing application to the best of her ability. She gave Blue Cross permission to review her medical records. Blue Cross accepted her application and sold her coverage. After Horton sought routine medical care, Blue Cross scoured Horton's medical record and retroactively canceled her coverage. Blue Cross said it would have never sold her a policy if the company had known Horton had "polycystic ovaries," a condition not disclosed on her application. The rescission letter was the first time Horton had ever heard about this condition. Horton's doctor had suspected she had the condition, noted it in Horton's medical file, but never told Horton about it.
In her testimony to the committee, Wittney Horton said: "Americans desperately need health care reform. As my experience shows, owning an insurance policy does not necessarily equal access to health care. If insurance companies are not prevented from canceling or restricting coverage after patients get sick, insurance policies are not worth the paper they are printed on. Insurance companies are making record profits by collecting premiums in exchange for the promises they make to be there when people need them. Make them keep that promise."
In a letter to chairman Henry Waxman (D-CA) last year when the subcommittee began its rescission investigation, Consumer Watchdog urged lawmakers to bar such rescissions unless an insurance company could prove that the patient "intentionally misrepresented" her health condition as required under federal law. Under such an approach, Blue Cross could not cancel Horton's policy since she was not aware of the condition and therefore could not have lied about it on her application.
"If all Americans will have to prove they own insurance policies, the government must also make insurance companies stick to their promises. That means not letting insurers cancel coverage or dump sick patients into low benefit policies that effectively block access to the care patients need," said William Shernoff of the law firm Shernoff, Bidart, Darras and Echeverria representing Ms. Horton.
Democrats in Congress who want strong reform should strive for a repeat of yesterday's fireworks. It's time to put the health insurance executives on the spot and give patients who have been victimized by company policies a spotlight.
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