Blue Shield of California, the cuddly non-profit, is going to the mat with the state over recissions. Essentially Shield is saying, “It was fraud, so the recissions are legal.” Everyone else has settled.

This has mightly pissed off California insurance commish Steve Poizner. A Republican, albeit one I voted for:

Calling the allegations "serious violations that completely undermine the public’s trust in our healthcare delivery system and are potentially devastating to patients," Insurance Commissioner Steve Poizner said he would announce today that he would seek a $12.6-million fine.

That’s almost real money.

But what really got me was an interview I heard with Poizner on NPR just now. He said that first, none of the cases he’s raising have any hint of fraud by the consumer. Second, and this is the controversial part, as soon as an insurer issued a policy, it had the obligation to live up to it. Once the policy was issued, he assumed that the insurer had completed its investigation into the application and that was that.

Blue Shield is one of two plans that investigated my application a couple of years back, and the one that did the most thorough job. Healthnet accepted what I said (after I said it twice). Blue Shield accepted what I said and looked at my medical records (which duplicated what I said). But then they decided I was uninsurable.

I suspect that Blue Shield is correct in its interpretation of the law. But in winning that battle it’s helping to lose the “war”, in as much is the war retains the right to make huge profits in the individual insurance business.

And what is most bizarre is that culturally and politically, Blue Shield and its CEO Bruce Bodaken are probably on the side of massive insurance reforms that would eliminate the individual market as we know it. So quite why they’re fighting so hard I don’t know.

But when you lose the support of the Republicans….