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The Associated Press reported today that two of California’s largest health care insurers, Anthem Blue Cross and Blue Shield of California, will pay regulators $13 million to settle claims that the carriers illegally cancelled coverage to policyholders after medical bills were submitted to the plans for payment. The action was pursued by the California Department of Managed Health Care.

In addition to this assessment, the companies agreed to reinstate coverage to approximately 2,200 enrollees whose policies had been rescinded. Further the companies agreed to reimburse these enrollees for all medical expenses incurred while coverage was denied.

Remarkably, Blue Shield’s Vice President of Public Affairs stated that the companies did not acknowledge that “our practices were inappropriate.” In further defense, he asserted that cancellations involved only a small percentage of their policyholders, approximately “one-tenth of 1 percent of our individual health plan contracts since 2004.”

His words are interesting, if not deceptive. Wouldn’t it be more meaningful to know how many of the cancellations were made before any claims for benefits were made? Wouldn’t it also be more enlightening to know the amount of money that Blue Shield and Blue Cross were attempting to save by denying coverage? And isn’t it interesting that he segregated “individual health plan contracts” in his commentary. Aren’t these policies purchased by individuals who pay the highest price for coverage for themselves and their families because they are not associated with an employer or other group plan? And, aren’t these “individual health plan” policyholders the ones that are most vulnerable to financial ruin when coverage is denied? Finally, aren’t the owners of “individual health plans” the ones that have the least clout and voice, and accordingly, would have the hardest time making a claim against these huge insurance carriers?

We think that the entire health care insurance industry needs to rethink and reshape its coverage practices. As Governor Schwarzenegger observed, “patients should not live in fear of unfairly losing their health care coverage when they need it most.” If the carriers do not reform their practices, the legislators must be called upon to do it for them.

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