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Health care coverage restored — good for patients, maybe too late for plans

Saint Lisa Girion (and I say that without a smirk on my face!) reports in the LA Times on the latest chapter in the story she started about the ongoing saga of the retroactive cancellations of health insurance by all the big players in the California individual market.

Now Kaiser Permanente (which really should have been above this type of a mess in the first place) has decided to reinstate over a 1,000 of its cancellations, and Health Net, which was fined $9m in arbitration for one cancellation alone, has added a few more. This will intensify the pressure on Wellpoint, United Healthcare, and Blue Shield (the only one still fighting for the right to rescind coverage retroactively) to similarly cave. Kaiser, by the way, is also paying a paltry $300,000 fine. Health Net must be envious.

However, even if the others cave in and reinstate coverage, and pay for claims they previously denied, there are three remaining issues dangling from the controversy.

First, the Department of Managed Healthcare, which brokered the Kaiser deal, only regulates HMOs. Some “insurance” companies, like the Wellpoint and Blue Shield subsidiaries which did some of the cancellations, are regulated by the elected State insurance Commissioner Steve Poizner, who despite the R after his name, has been very aggressive in going after them. Adnd the City Attorney of Los Angeles, Rocky Delgadillo, is suing Health Net and Wellpoint in related cases. So the insurers legal problems with the government certainly aren’t over.

Then there are the lawyers. William Shernoff, the attorney who’s been going after Wellpoint since the stories first came out, told the LA Times that …

He would tell clients to "accept the reinstatements because that’s wonderful to get the medical care — that is important." But, he added, "as far as damages for past harm, there’s no doubt in my mind that the best place for them to get their full damages will be in court rather than in an arbitration process."

In other words, the plans can’t get away with just paying back what they owe. Shernoff is still coming after them for more. And $9 million multiplied by lots of cases smells very tempting to a lawyer who knows he’s on the winning side.

Finally, despite Lisa’s best efforts this story hasn’t
really broken into the national consciousness. However, it’s clearly
the most important thing that’s happened within the individual health
insurance market in the past few years.

Why does this matter?

Well, you may have heard of this John McCain fellow. He is
not only running for President but also has a health policy proposal, which if you strip away the fine print, would require people to go out and buy insurance in the individual market
from these very same plans that have been behaving so badly. This, at a
time when the polling data suggest people want more protection from
governments — not less.

Do you think that at some point the Democratic attack
machine will wake up and put a few of the individuals with canceled policies on TV to warn about Americans about the individual market
that McCain wants everyone to join?

My sources point to yes.

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David Hamilton
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Another interesting element here is that many of these insurers are also in trouble with Wall Street, and have promised to boost their income by hiking premiums and cutting medical expenses — which is going to be that much more complicated now that everyone is under scrutiny over the rescission fooforaw.
I’ve written more about this over at the BNET Healthcare blog.