In yet another step that health insurance companies are taking ahead of healthcare reform schedule, two of the nation’s largest health insurers have announced that they will be ending the practice of dropping health insurance policyholders when they become sick, common referred to as “rescission.” Under healthcare reform, Wellpoint, the parent company for Anthem Blue Cross, and Blue Shield of California would be required to end rescissions later this year, so both are well ahead of schedule.
In the past, insurers have rescinded policies by reviewing policyholders’ health insurance applications for omissions or mistakes which would void the policy when they become sick and begin filing claims. Insurers have justified that practice on the grounds that it prevented fraud, but investigations into rescissions revealed that insurers would often rescind policies in cases of trivial omissions or mistakes wholly unrelated to their later claims.
After a rescission, a former policyholder would often have no other avenues to purchase health insurance since they would have already received a diagnosis for a medical condition, and other health insurance companies would refuse health insurance coverage on the basis of a pre-existing condition.
The state’s five largest health insurers (Anthem Blue Cross, Blue Shield, Health Net, Kaiser and Pacificare) have accounted for at least 5,000 rescissions in California since 2004.
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