On Mar 20, 2010, at 8:35 PM, SA wrote:
> I'm not an expert, but my understanding is that the regulatory
> agency supposedly empowered to sanction companies that do
> rescissions is the administrator of the health insurance exchange.
> He or she has the power to exclude a company from the exchange if it
> breaks the rules.
I asked David Himmelstein and Steffie Woolhandler what they make of all this. Their answer:
> As we understand it the Senate bill's language on recission is as
> follows: "A group health plan and a health insurance issuer offering
> group or individual health insurance coverage shall not rescind such
> plan or coverage with respect to an enrollee once the enrollee is
> covered under such plan or coverage involved, except that this
> section shall not apply to a covered individual who has performed an
> act or practice that constitutes fraud or makes an intentional
> misrepresentation of material fact as prohibited by the terms of the
> plan or coverage. Such plan or coverage may not be cancelled except
> with prior notice to the enrollee, and only as permitted under
> section."
>
> There are two key questions regarding the effectiveness of this
> provision.
>
> 1- The regulations defining "fraud" and "intentional
> misrepresentation of material fact" - In fact, insurers claim that
> most recissions at present are in cases of fraud or
> misrepresentation. Hence, they would claim that their current
> practices adhere to the standards in the Senate bill. Regulations
> defining the meaning of "fraud" and misrepresentation will be
> written after the legislation is past, and will be critical in
> determining whether current practices are out of compliance.
>
> 2- The vigor with which the regulations are enforced - California
> already has anti-recission regulations on the books, but enforcement
> has been lax - partly because insurers have outgunned the regulators
> in terms of legal resources. Its far from clear that the feds would
> be more effective, even if they want to be.
>
>
> In sum, the law includes rhetoric that forbids recission but may, in
> practice, have little effect.