Under mounting pressure from consumer advocates, the state's HMO regulator plans to introduce a rule that would make it harder for health insurers to drop policyholders after they get sick.
Cindy Ehnes, director of the Department of Managed Health Care, is expected to propose that insurers be required to maintain coverage unless they show an individual lied about his or her medical condition to obtain it.
Health plans routinely cancel policies because of inaccurate or incomplete information on medical history questionnaires, regardless of whether the policyholder meant to deceive the companies.
Ehnes plans "to move forward with some kind of clarifying regulation," department spokeswoman Lynne Randolph said Monday, declining to provide details.
Consumer advocates said such a rule was long overdue, but industry officials warned that it could drive up costs and result in higher premiums for consumers. Health insurers say they revoke only a small fraction of policies.
The push for a stronger rule comes after a series of Los Angeles Times articles examining insurers' cancellation practices.
At issue is individual health insurance, which, unlike group coverage, allows insurers to reject applicants deemed to be too risky based on their medical history and their answers to a detailed health questionnaire.
Randolph disclosed Ehnes' plans in response to a petition the department received Monday from consumer advocates. The petition demanded that the agency move to stop the industrywide practice of canceling policies over misinformation in applications, whether or not the policyholder intended to lie.
The petition was filed by the Foundation for Taxpayer and Consumer Rights, a Santa Monica group that was instrumental in the adoption of auto-insurance rate reforms and enhanced patient protections against HMO treatment denials.
The group's petition says a 1993 state law clearly prohibits the cancellation of health insurance unless a company can prove "willful misrepresentation."
Foundation spokesman Jerry Flanagan said insurers were free to violate that law because the department failed to enforce it until recently and never adopted implementing regulations.
"These regulations are 13 years overdue," he said.
But industry officials say the law allows insurers to cancel policies when they find policyholders failed to disclose all relevant facts in their medical history on applications, regardless of whether the applicant intentionally lied.
