Let's hop in the Wayback Machine, Mr. Peabody!
2019 OPEN ENROLLMENT ENDS (most states)
Time: D H M S
Over the past few weeks, a whole bunch of polls have come out showing that support for Obamacare has miraculously shot up substantially now that there's a very strong possibility that it will actually be repealed for real. Obviously there's a lot of "You don't know what you've got 'til it's gone" stuff going on here.
For all the arguing and debate about the benefits and downsides of the ACA, however, there's one major positive which received some attention when it first passed but hasn't been talked about much of late: Rescission.
Rescission, as you may recall, was an ugly little gimmick that insurance companies used to use in order to utterly screw over people who had been paying them premiums for years or even decades. Here's how it would work:
- Someone would fill out their individual market healthcare policy paperwork, including their medical history (past surgeries/illnesses, etc).
- They'd be approved and enrolled.
- They'd quietly pay their premiums month in and month out for years or even a decade, rarely taking out more than a nominal claim here and there.
- One day, they'd be seriously injured or diagnosed with some truly expensive ailment (cancer, diabetes, whatever).
- Suddenly, after years of paying thousands of dollars, they actually need their health insurance provider to do the very thing it exists for: Pay for the bulk of their medical treatment.
- Instead, the carrier combs through every word on the paperwork filled out years earlier and finds the tiniest, most absurd "error" or "omission" they possibly can (an unreported flu shot 20 years earlier, etc etc) and uses that as an excuse to kick the enrollee off of their policy at the very moment they need the coverage most.
- The enrollee is now uninsured and out tens of thousands of dollars paid to the carrier while getting virtually nothing in return...and facing personal bankruptcy while also having to undergo painful, agonzing treatments/procedures at the same time.
To give you a taste of how ugly things were, check out this 2006 Los Angeles Times article on the issue:
When Steve and Leslie Shaeffer's daughter, Selah, was diagnosed at age 4 with a potentially fatal tumor in her jaw, they figured their health insurance would cover the bulk of her treatment costs.
Instead, almost two years later, the Murrieta, Calif., couple face more than $60,000 in medical bills and fear the loss of their dream home. They struggle to stave off creditors as they try to figure out how Selah can keep seeing the physician they credit with saving her life.
"We're in big trouble," Leslie said.
Shortly after Selah's medical bills hit $20,000, Blue Cross stopped covering them and eventually canceled her coverage retroactively, refusing to pay for treatment, including surgery the insurer had authorized in advance.
The company accused the Shaeffers of failing to disclose in their coverage application an undiagnosed bump on Selah's chin and physician visits for croup. Had that been disclosed, the company said in a letter, it would not have insured Selah.
It's a lengthy article which includes several other horrific examples of the problem. In terms of the numbers:
Outside the companies, no one tracks how often insurers cancel policies. Blue Cross, which has the biggest share of the California market, won't say. But an employee said in a deposition last year that a special department considers as many as 1,500 cases for cancellation each week in California alone. A consumer lawyer who saw Blue Cross' cancellation tally sheets described the department as a rescission factory.
Now, obviously this is an extremely weak data point to extrapolate from, and I'm sure not every carrier was as aggressive about rescission...but others were probably worse.. According to the Kaiser Family Foundation, as of 2011, WellPoint Inc. (the parent company of Blue Cross of California at the time) had around 610,000 enrollees in the CA individual market. Taking "up to 1,500/week" at face value would average perhaps 1,000/week, or around 50,000 per year...roughly 8% of their total enrollment, which I admit sounds suspiciously high.
However, even if it was only half that (around 4%), that would still extrapolate out to up to 400,000 people per year nationally (the total pre-ACA individual market hovered between 10.6-10.9 million people in 2011).
Again, that still sounds like an awful lot of people...but back in 2009, this guy did the math a different way, using the Congressional testimony of the then CEO of Assurant:
The House hearings on rescission – the retroactive cancellation of individual health insurance policies – were over a month ago, but after its initial run through Daily Kos it seems to have waited a bit before popping up on Baseline and Slate. James Kwak at Baseline [quoting the testimony of an Asssurant CEO] described the practice as rare, affecting only 0.5% of the population. The faint light bulb above my head began to flicker: could that be true…that’s not rare – that is amazingly common.
...To understand why 0.5% of the people Assurant covers is a lot of people – a jarring, terrifying, probably criminal lot – you need to understand a little bit of math.
He points out that only a small percentage of the population racks up the vast majority of medical bills, which means that while 0.5% of the population may not sound like a lot (that was still over 53,000 people nationally even if you're only talking about the individual market at the time), it's concentrated among those with insanely expensive ailments, by definition (insurance carriers had no reason to "rescissionize" anyone who wasn't making heavy claims, after all).
So we're talking about, at a minimum, "only" 53,000 people utterly screwed over each year by a disgustingly cold-hearted and cruel practice and left to suffer and in many cases die an agonizing death specifically to pad a corporation's bottom line.
UPDATE: In the comments below, "M E" estimates that the actual number could be considerably lower--perhaps 16,000 annually--and that some of those could have been for legitimate reasons (deliberate fraud, etc). Of course, even if that's accurate and 1/2 the cases really were fraud, that's still 8,000 people per year, which doesn't sound like many...unless you're one of those 8,000, of course.
So what does all of this have to do with the Affordable Care Act? EVERYTHING:
Insurance industry will end rescission in May
04/28/10 01:59 PM EDT
The health insurance industry has decided to end its practice of cancelling claims once a patient gets sick next month, well before the new health care law would have required it, the industry’s chief spokesman said Wednesday.
"While many health plans already abide by the standards outlined in the new law, our community is committed to implementing the new standards in May 2010 to ensure that individuals and families will have greater peace of mind when purchasing coverage on their own," AHIP president and chief executive Karen Ignagni said in a letter to top House Democrats.
The decision to end rescission, as the practice is known, was made during a Tuesday afternoon conference call of chief executives organized by their trade group, America’s Health Insurance Plans, and represents the industry’s latest attempt to build political good will after the bruising health care fight.
The decision came on the same day that WellPoint, under fire for reports that it had targeted breast cancer patients for rescission, announced it would end the practice by Saturday. On Wednesday, UnitedHealth also announced it had eliminated the practice,
Congressional Democrats and Health and Human Services Secretary Kathleen Sebelius had pressured companies to end the practice early. The overhaul plan will ban the practice in September, except in cases of fraud or intentional misrepresentation, and subject it to a third party review.
The Affordable Care Act has many flaws which need to be addressed; this is undeniable. But it also has many incredibly important benefits which are absolutely vital to keep in place...and banning "rescissions" is among the least remembered and most important.
On a related note, here's another L.A. Times article from October 2009, shortly before the final version of the ACA was passed and signed into law by President Obama. This isn't in quite the same boat, as it has to do with corporate ERISA protections, not individual market rescission (the family was enrolled in an employer policy via Cigna) but I'm including it just to give another idea of just how ugly and cruel insurance carrier practices could be at the time:
Insurer's agreement to cover surgery comes too late
A couple's initial wrongful-death suit against Cigna over the loss of their 17-year-old daughter evolves into an effort to bring change.
Surrounded by supporters, Hilda Sarkisyan marched into Cigna Corp.'s Philadelphia headquarters on a chilly fall day, 10 months after the company refused to pay for a liver transplant for her daughter.
"You guys killed my daughter," the diminutive San Fernando Valley real estate agent declared at the lobby security desk. "I want an apology."
What she got was something quite different.
Cigna employees, looking down into the atrium lobby from a balcony above, began heckling her, she said, with one of them giving her "the finger."
Sarkisyan walked out, stunned and hurt.
"They showed me their true colors," she said. "Shame on them."
Cigna later apologized for the 2008 incident, but it has now become -- unintentionally -- the central element of a lawsuit Sarkisyan and her husband, Grigor, are pressing against the health insurer.
The suit began as a wrongful-death complaint, with the couple contending that Cigna's refusal to cover the transplant led to Nataline's death Dec. 20, 2007, in a case that drew national media attention.
A Los Angeles judge threw out the wrongful-death complaint, saying it was barred by a 1987 U.S. Supreme Court ruling that shields employer-paid healthcare plans from damages over their coverage decisions.
But U.S. District Judge Gary Allen Feess said the Sarkisyans could pursue damages for any emotional distress caused by the Philadelphia incident.
The ruling was bittersweet for the Sarkisyans and patient advocates, who say it points to the need for federal legislation to allow people to sue health insurers for the life-or-death decisions they make.
"They kill a beautiful 17-year-old girl, and I get to go after them for a finger? That's sick," Hilda Sarkisyan said.
The Sarkisyans contend that Cigna improperly refused the transplant that Nataline's UCLA physicians said at the time was urgently needed to save her life, and that the company reflexively issued a denial letter without looking into the specific circumstances.
The company said at the time that, for Nataline, the operation would have been experimental and was not covered. Nine days later, amid a storm of publicity, Cigna agreed to cover the transplant.
It was too late. Nataline died hours later.
(I'm honestly not sure whether the ACA has separate provisions which would have addressed the Sarkisyan's specific case; I've found several articles on how the ACA deals with ERISA issues here and here which seem to suggest that it would have, but I'm not certain about that; I'll post an update on this if I find out more).