Health Insurance Changes Come Too Late For Some Among the provisions of the new health law that go into effect today is a ban on the industry practice of revoking an insurance policy retroactively -- after a policyholder has racked up hefty medical bills. But consumer advocates worry the practice could continue.
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Health Insurance Changes Come Too Late For Some

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Health Insurance Changes Come Too Late For Some

Health Insurance Changes Come Too Late For Some

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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It's MORNING EDITION from NPR News. I'm Steve Inskeep.


And I'm Linda Wertheimer.

President Obama touted the health care overhaul law yesterday. He signed it six months ago, but several provisions are now kicking in. The president said one of the main benefits was psychological.

President BARACK OBAMA: Ultimately, the thing thats most important is, weve just got to give people some basic peace of mind.

WERTHEIMER: The changes under the law include a ban on insurance companies revoking policies after a patient has undergone costly medical care. NPR's Julie Rovner reports.

JULIE ROVNER: The practice is called rescission. Here's how it works. When you buy insurance on your own, you have to fill out an application, usually pages long, telling the insurance company all about your medical history. If you pass that test, and you get the insurance, people often think they're home free. Only in many cases, they're not. Typically they'd be fine only until something bad happened.

Mr. JAMIE COURT (President, Consumer Watchdog): And they wind up in the hospital - it could be a car crash, it could be anything. And they've got 100s of thousands of dollars in medical bills.�

ROVNER: Jamie Court is President of Consumer Watchdog, a California-based advocacy group.�

Mr. COURT: And right when they get out of the hospital and the hospital submits the claim to the insurance company, the insurance company says, Aha, 10 years ago, you didn't tell us you had high blood pressure, or you didn't tell us you had diabetes.

ROVNER: Then the insurance company used that omission to rescind the person's insurance, retroactively.�

Mr. COURT: So it's leaving people not only without health insurance going forward, it's leaving people with�100s of thousands of dollars in medical bills and facing bankruptcy.

ROVNER: At issue, is whether the policyholders intentionally withheld information or whether their mistakes were innocent. Court says in many cases the reasons for rescinding the policies were completely unconnected to the medical claims.

Mr. COURT: Literally, a yeast infection or a very minor ailment.

ROVNER: Sometimes it wasn't even an omission at all. That's what happened to Chris Peterson, a farmer from Clear Lake Iowa, and his wife. Peterson didn't hide the fact that he had high blood sugar when his insurance agent helped him apply for a new insurance policy.

Mr. CHRIS PETERSON: He sat right here at the table, and I said let me go and get my pills. And some of them were controlling your blood sugar, you know, keeping it down. But he wrote stuff right down in the application.

ROVNER: But after Peterson had hernia surgery in a year or two later - and got written approval in advance - he started to worry when the hospital bill didn't get paid.

Mr. PETERSON: What I did get in the mail was a letter from the insurance company stating that they were rescinding my insurance, and that, oh, by the way, all these bills are now yours.

ROVNER: The company, American Community Mutual, said Peterson had failed to disclose his blood sugar problem. At first they allowed his wife to keep her policy, but about eight months later, Peterson says, after she sought treatment for a minor heart problem, they rescinded her, too.

Mr. PETERSON: There was an inch variance in height and then she had a variance of five pounds in weight. And at the end of the letter, they claimed that she lied on the application.

ROVNER: We called American Community for comment, but the company's been taken over by state officials.

Meanwhile, at a 2009 hearing in Congress, after hearing stories similar to Chris Peterson's, Don Hamm, the CEO of another insurance company, Assurant Health, said he wished his company didn't have to rescind policies.

Mr. DON HAMM (CEO, Assurant Health): It's just that today, when we have a voluntary system of insurance where people choose, we have to collect information upfront to underwrite. And if we didn't have that process, then people would wait until they had a health condition before applying for coverage.

ROVNER: Consumer advocate Jamie Court says he's happy that the law now says insurance companies can't�rescind coverage unless they can prove a person lied on the application. But he warns that aggressive enforcement will probably be required to keep companies from trying.�

Julie Rovner, NPR News, Washington.

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