Remember the Part in 'Sicko' When Sick People Had Policies Canceled Back to Starting Point?

by LAS

The Michael Moore film Sicko threw light on many kinds of problems that ordinary people have with their health insurers. One such problem is rescission, where a company decides that it issued a policy in error (often claiming the policyholder lied or omitted required information on the application), and cancels that policy all the way back to its starting date.

This sticks the hapless policyholder with all the bills that the insurer had paid while the policy was in force. Sicko related the story of one such victim of the rescission power, who had omitted a history of yeast infection and was stuck with a $7000 surgery bill for an unrelated illness. NAIC, the regulating body for the insurance industry, has decided to take steps to curb abuse of rescission and bolster consumer protection.

NAIC sent a letter to the House Energy and Commerce Subcommittee on Oversight and Investigation. In this letter, NAIC outlined its plan to analyze rescission-related consumer complaints, and develop procedures for external reviews of these rescissions. It stated that it is determined to prevent abuses of the rescission authority, which is used by insurers to cancel policies that it decides were issued in error.

It is nice to see that Moore's film has prodded NAIC to at least examine the practice of rescission and promise to improve consumer protection. We will see what comes of this, or whether the industry will pull the teeth out of any attempts to regulate itself.