And they thought they had insurance …

by Assemblyman Hector De La Torre, Anmol S. Mahal, San Francisco Chronicle

Unfortunately, HMOs and insurance companies have been engaging in a
noxious practice which undermines these noble and necessary efforts. As
a way to increase their profits, HMOs have been telling their
policyholders that they are covered for treatment – and then canceling
the policy after the treatment has been provided, leaving the
policyholder with the bill.

In other words, you can pay your insurance premiums on time for years,
get the necessary pre-authorization for treatment from your insurance
company, and the insurer still can refuse to pay for your treatment.

This practice by insurance companies has had a destructive financial
impact on Californians who thought they had health insurance. A
Murietta family whose child was diagnosed with a potentially fatal
tumor in her jaw had health insurance, but when the medical bills
started piling up, the HMO refused to pay for the treatments and
eventually canceled the policy completely. A Riverside woman with
health insurance was denied coverage by her insurance company for
giving birth to her child in the wrong hospital – even though it was a
facility approved by her HMO.

At one of the most vulnerable points of their lives, these families
were left without the very protection they thought they had purchased.

These stories aren’t isolated incidents. Responding to a growing number
of articles in the press and complaints from policyholders who had
their policies canceled, the state Department of Managed Health Care
(DMHC) – the agency that oversees HMOs – opened an investigation into
one insurer, Blue Cross of California. Of 90 canceled policies randomly
selected to examine, every single one was in violation of state law.

The DMHC also discovered in its investigation that Blue Cross had a
corporate department dedicated to finding ways to deny coverage and
cancel policies for pregnant women and the chronically ill. Blue Cross,
which has made more than $1 billion in profits in the last two years in
California, was fined $1 million.

Blue Cross isn’t the only company. In California, at least six
health insurance companies face legal proceedings for canceling
policies after patients sought treatment.

The law provides some protection to consumers, but it is not enough.
HMOs have aggressively sought to skirt the law by finding loopholes as
a way to cancel policies after authorizing treatment. The fines imposed
haven’t been effective in changing these practices either: $1 million
is just the price of doing business for a company making billions in

AB1324 strengthens the law’s protections and makes clear that insurance companies cannot cancel health care policies
and leave patients stranded when they need coverage the most. The bill
passed out of the Legislature with overwhelming bipartisan support in
both houses and now awaits Gov. Schwarzenegger’s signature.

Doctors, hospitals and other organizations, including the American
Cancer Society, American Lung Association, San Diego Regional Chamber
of Commerce and the Consumer Federation of California support this bill and its protections for patients and policyholders.

We urge the governor to sign this bill, to ensure that when his efforts
to achieve universal health care coverage in California are ultimately
successful, the "coverage" actually means coverage that Californians
can count on.

Gov. Arnold Schwarzenegger and legislative leaders have been working
toward providing health care coverage to as many Californians as
possible. The governor has even proposed extending coverage to all
Californians as a way to ensure people have access to doctors before
they end up seeking urgent care in emergency rooms, which is much more