Imagine that you are diagnosed with lymphoma (a form of cancer) and need expensive treatments. Good thing you have been paying your health insurance premiums for all those years, right?
But then, your health insurance company assigns someone to go over your health records in detail, looking for a reason to cancel your coverage. And sure enough, they find a note that a doctor put into your chart years ago about a possibility that you might have an aneurysm and gallstones. How small a possibility? So small that the doctor didn’t even bother to tell you about it.
But that’s enough to qualify as something that you failed to disclose to the insurance company when you originally signed up. So the company accuses you of fraud, and refuses to pay for your treatment. And you die.
You don’t have to imagine very hard — this happened to a man in Illinois.
You might think things like this might be a mistake, or are rare. But you would be wrong. According to a congressional study, three health insurance companies alone (WellPoint, UnitedHealth, and Assurant) cancelled the coverage of more than 20,000 people in the last five years, allowing those companies to avoid paying out more than $300 million in claims. Probably far more, since once someone is denied coverage (or they die) they stop making claims. According to some estimates, over 26 thousand Americans die every year because of lack of adequate health care.
In fact, the insurance companies even have a name for canceling coverage for failure to disclose. They call it “rescission”, and — get this — they reward their employees who find the most people to cancel.
Just to make this clear, they can cancel your coverage for anything you failed to disclose, no matter how minor or how long ago, no matter if it has nothing to do with your current claim, and even if you had no knowledge of it.
Another example, a nurse in Texas lost her coverage after she was diagnosed with aggressive breast cancer, because she forgot to tell them about a visit to a dermatologist for acne. Seriously, zits.
Testifying in front of Congress, the executives of those three companies all said that they would continue to cancel coverage of sick Americans, even in cases where the failure to disclose was not the fault of the patient, or was an honest mistake.
As Representative John Dingell remarked “This is precisely why we need a public option.”
UPDATE: More information on this from NPR.