One of the best arguments for universal health insurance is that it would eliminate cases such as Robin Beaton's. A former nurse in Texas, Beaton's coverage was canceled retroactively by Blue Cross while she was awaiting a double mastectomy. Why? As she told Congress, she had unwittingly omitted some of her medical history from her application form. It wasn't related to her cancer, but the omission gave Blue Cross an excuse to rescind her policy.
Beaton was fortunate enough to have her coverage reinstated a few months later, after her congressman intervened. Thousands of other individual policyholders haven't been so lucky. A congressional subcommittee found that 20,000 people had their policies rescinded by just three insurance companies over a five-year period, saving the companies $300 million in claims. It also unearthed evidence suggesting that one of those companies -- WellPoint Inc., which owns Blue Cross in California -- encouraged employees to rescind policies as a way to cut costs.
Rescissions are just the most extreme form of cherry-picking those seeking individual coverage. Other techniques that insurers use include denying policies to people who previously suffered a serious ailment, or tailoring coverage to exclude unusual and costly conditions. Such exclusions push consumers into expensive state programs for "high risk" individuals or leave them with no coverage.