California Insurance Commissioner Steve Poizner plans to unveil proposed regulations today to combat the health insurance industry practice of dropping members with costly illnesses.
Poizner's draft regulations would require insurers to write applications for coverage in plain English and allow applicants a "not sure" answer to questions about their preexisting medical conditions. In addition, they would bar insurers from dropping someone if the companies failed to thoroughly investigate an applicant's medical history before issuing a policy.
Even if an insurer did all that, the rules would bar a cancellation if the patient was unaware of the medical information being sought on the application or failed to appreciate its significance.
It is the latest effort to curb rescission, an industrywide practice that has deprived thousands of Californians of healthcare coverage when they were sick, left many with crushing medical bills and saddled physicians and hospitals with uncollectible debt.
The once-hidden practice has drawn scrutiny since it was exposed in a series of Times articles over the last three years.
Consumer advocates said the rules would make it virtually impossible for insurers to drop people over innocent mistakes, omissions and misunderstandings. Insurers said they were reviewing the proposal.
Poizner said it would "deliver a dose of preventive medicine for rescissions."
"Consumers deserve to have their insurance companies hold up their end of the deal, paying out claims and not canceling coverage when it's needed most," he said.
The proposed regulations "will give insurers the guidance they need to follow the law and help prevent illegal rescissions."
Poizner set a public hearing on the rules for July 20 in San Francisco and may revise them based on testimony there and on written comments. He is expected to issue a final set of rules sometime in the fall.
William Shernoff, a Claremont lawyer who represents hundreds of people who lost coverage, said the regulations "would be a great step forward."
"These are very good, pro-consumer regulations that should be enacted tomorrow," he said. "There is not one insurer in the past that has even come close to complying with regulations like this. And if they take effect, there would be very little rescission activity, very little."
