Health Insurance Insider: 'They Dump the Sick'

Pollitz said that insurance companies should provide more information about how coverage works so that consumers are better equipped to compare policies as they shop for coverage.

Metcalf spoke of how many Americans have mistakenly bought lower-cost insurance policies without realizing how little the policies actually cover.

"They were no match for insurance companies who know exactly how to design and market plans whose gaping holes don't become apparent until it's much, much too late," she said.

Sick Patients, Canceled Policies

As Congress and the White House continue to work on health-care reform, health insurance companies have been subject to intense grilling by lawmakers during several hearings.

Last week, three insurance company executives testified before Congress on the issue of health insurance rescissions -- the cancellation of insurance policies -- for seriously ill policyholders.

A year-long investigation by a subcommittee of the House Committee on Energy and Commerce found that three major U.S. insurance companies, WellPoint Inc., Assurant Health and United HealthGroup, canceled nearly 19,800 customer policies between 2003 and 2007.

The companies argue that rescissions are relatively rare and are important in combatting insurance fraud.

"In 2008, WellPoint's affiliated health plans rescinded one-tenth of one percent of new individual market enrollment," WellPoint said in an e-mailed statement to "While rescissions impact a very small percentage of applicants for coverage it is important to protect the majority who are honest on their applications for coverage."

Insurance companies are, by law, allowed to rescind policies for customers who found to have purposely lied or omitted information from their policy applications. But some of the rescissions the subcommittee found were for seriously ill people who had simply made mistakes on their applications.

Catching Fraud or Skirting Health Care Bills?

The committee found that the companies saved more than $300 million as a result of the rescissions. One WellPoint employee, the committee said, was awarded with a perfect performance appraisal after saving the company $10 million. (WellPoint told that the money-saving reference in the appraisal was an "aberration" and said that the employee did not receive any extra salary or bonus.)

"These practices reveal that when an insurance company receives a claim for an expensive, life-saving treatment, some of them will look for a way, any way, to avoid having to pay for it," subcommittee chairman Rep. Bart Stupak, D-Mich., said at the hearing.

Two former customers of Blue Cross of California, a subsidiary of WellPoint Inc., told that the company canceled their insurance policies after such mistakes.

Mark Robison, of Santa Rosa, Calif., said Blue Cross canceled his policy after claiming that he knowingly omitted information about his then 8-year-old son having an undescended testicle. Robison said that Blue Cross already had information on his son's medical history on file. His son was under Blue Cross's coverage when he was initially diagnosed with his condition.

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