Schwarzenegger Must Keep His 'State of the State' Promise to Protect All Californians By Signing Legislation
Los Angeles, CA -- New legislation awaiting Governor Schwarzenegger's signature is needed to protect Californians from future cancellations of coverage when they get sick and need coverage the most, said Consumer Watchdog. Watch an excerpt of this year’s State of the State address in which Governor Schwarzenegger promised to protect Californians from retroactive insurance cancellations on You Tube.
Today's announcement by Aetna that it would voluntarily subject retroactive cancellations of coverage - rescissions - to reviews by three-member physician panels does not sufficiently protect current and future policyholders. Consumer Watchdog said that the essential missing element is a clarification of the legal standard for rescissions -intentional misrepresentation, not an innocent omission- which is provided by Assembly Bill AB 1945 authored by Assemblyman De La Torre.
"Insurers are arguing, much like banks have for a decade, that they are capable of policing themselves and AB 1945 is unnecessary government oversight. Every American knows the trouble that self-regulation in the financial sector has got us into. Aetna has not said that it can rescind a patient only if the patient intentionally misrepresented a past health condition. Independent review of an insurer's decision to cancel care will not help patients if the rule the reviewers follow is that innocent patients can be canceled. Independent review without a clear legal standard will lead to unfair and inconsistent results," said Jerry Flanagan of Consumer Watchdog. "In his State of the State address Governor Schwarzenegger promised that he would take action so that these devastating cancelations would 'not happen to any other Californian.' To keep that promise Governor Schwarzenegger must sign AB 1945."
Read a letter Consumer Watchdog sent to Governor Schwarzenegger explaining why a series of settlements between regulators and insurance companies proposing third party reviews are insufficient to protect against future cancellations.
Assembly Bill 1945 by Assemblyman Hector De La Torre (D-South Gate), which passed the legislature with bipartisan support, comes in response to widespread news coverage of health insurers -- including Blue Cross, Blue Shield, Kaiser, Pacificare and Health Net -- violating state law by using innocent omissions on an insurance application to cancel coverage after a patient falls ill.
The key element of Assembly Bill 1945 states that a patient’s health coverage cannot be rescinded unless the patient intentionally misrepresented or intentionally omitted health information on his or her application for coverage.
Health insurance companies strongly opposed the legislation. Rescinding innocent patients helps insurance companies protect their profit margins by waiting until a patient files a claim to get rid of policyholders who might actually cost them money. Health insurance have contributed more than $1 million to Governor Schwarzenegger.
- 30 -