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Globe Editorial

Calculating insurance interests

June 25, 2009
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LAST WEEK, three insurance executives made starkly clear why President Obama is right to insist on a public-plan option in any health reform package. The three stood before Congress and refused to stop the practice of canceling coverage of sick policyholders for unrelated medical reasons, even in cases where the firms can’t show intentional fraud by the policyholders. The industry should be relieved that all Obama is threatening it with is a rival plan and not a SWAT team.

The industry’s bloodless term for pulling the coverage of patients with non-group policies even after they have paid years of premiums is “rescission.’’ Companies rescind policies - and save themselves millions in pending claims - even when there is no evidence that the sick policyholder had failed to disclose a relevant preexisting condition. Congress heard, for instance, about a Texas nurse who lost coverage after a diagnosis for aggressive breast cancer. The reason? She had not disclosed a past visit to a dermatologist for acne.

A man with stage four non-Hodgkin type lymphoma lost his coverage as he was about to receive a stem-cell implant. The company pounced because a doctor had once noted in the patient’s file that a scan had shown a small aneurysm and some gallstones. The doctor had not informed the patient.

“Overall, what we have found is that the market for individual health insurance in the United States is fundamentally flawed,’’ said Representative Henry Waxman of California in a supreme understatement.

Despite these flaws, too many in Congress want to entrust the industry with coverage of the 47 million uninsured. Worse, they want to protect private insurers from competition from a Medicare-like public option for those who cannot get coverage through their employers. Presumably, a health reform law would include provisions banning the worst abuses, but as the three executives - from UnitedHealth’s Golden Rule Insurance Co., Assurant Health, and WellPoint Inc. - so baldly show, the yardstick of a public plan to measure the rest of the industry is a crucial protection.

Administrators of a public plan would hear from Congress in a heartbeat if they ever treated policyholders the way private insurers have. A Texas congressman did finally hear from the breast-cancer patient with acne who was denied coverage on a Friday last June for a mastectomy planned for that next Monday. By the time the congressman got the company to reinstate the policy it was October. The tumor had doubled in size and the surgeon had to remove all the lymph nodes in the woman’s arm.

If Congress can’t afford to provide uninsured Americans coverage as generous as its own, it should at least join President Obama and Senator Edward Kennedy and insist on a public-plan option.

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