Executives of three of the nation's largest health insurers told federal lawmakers in Washington on Tuesday that they would continue canceling medical coverage for some sick policyholders, despite withering criticism from Republican and Democratic members of Congress who decried the practice as unfair and abusive.
The hearing on the controversial action known as rescission, which has left thousands of Americans burdened with costly medical bills despite paying insurance premiums, began a day after President Obama outlined his proposals for revamping the nation's healthcare system.
An investigation by the House Subcommittee on Oversight and Investigations showed that health insurers WellPoint Inc., UnitedHealth Group and Assurant Inc. canceled the coverage of more than 20,000 people, allowing the companies to avoid paying more than $300 million in medical claims over a five-year period.
It also found that policyholders with breast cancer, lymphoma and more than 1,000 other conditions were targeted for rescission and that employees were praised in performance reviews for terminating the policies of customers with expensive illnesses.
"No one can defend, and I certainly cannot defend, the practice of canceling coverage after the fact," said Rep. Michael C. Burgess (R-Tex.), a member of the committee. "There is no acceptable minimum to denying coverage after the fact."
Rescission was largely hidden until three years ago, when The Times launched a series of stories disclosing that insurers routinely canceled the medical coverage of individual policyholders who required expensive medical care.
Sassi said rescissions are necessary to prevent people who lie about preexisting conditions from obtaining coverage and driving up costs for others.
"I want to emphasize that rescission is about stopping fraud and material misrepresentations that contribute to spiraling healthcare costs," Sassi told the committee.
But rescission victims testified that their policies were canceled for inadvertent omissions or honest mistakes about medical history on their applications. Rescission, they said, was about improving corporate profits rather than rooting out fraud.
"It's about the money," said Jennifer Wittney Horton, a Los Angeles woman whose policy was rescinded after failure to report a weight-loss medication she was no longer taking and irregular menstruation.
"Insurers ignore the law, and when they find a discrepancy or omission, they rescind the policy and refuse to pay any of your medical bills -- even for routine treatment or treatment they previously authorized," Horton said.
She and others from around the country accused insurers in testimony of gaming anti-fraud laws to take policyholders' premiums, only to drop people who developed serious illnesses. They testified that they or a deceased loved one had had policies canceled over innocent mistakes and inadvertent omissions on their applications.
A Texas nurse said she lost her coverage, after she was diagnosed with aggressive breast cancer, for failing to disclose a visit to a dermatologist for acne.
The sister of an Illinois man who died of lymphoma said his policy was rescinded for the failure to report a possible aneurysm and gallstones that his physician noted in his chart but did not discuss with him.
The committee's investigation found that WellPoint's Blue Cross targeted individuals with more than 1,400 conditions, including breast cancer, lymphoma, pregnancy and high blood pressure. And the committee obtained documents that showed Blue Cross supervisors praised employees in performance reviews for rescinding policies.
One employee, for instance, received a perfect 5 for "exceptional performance" on an evaluation that noted the employee's role in dropping thousands of policyholders and avoiding nearly $10 million worth of medical care.
Late in the hearing, Stupak, the committee chairman, put the executives on the spot. Stupak asked each of them whether he would at least commit his company to immediately stop rescissions except where they could show "intentional fraud."
The answer from all three executives:
Rep. John Dingell (D-Mich.) said that a public insurance plan should be a part of any overhaul because it would force private companies to treat consumers fairly or risk losing them.
"This is precisely why we need a public option," Dingell said.
Proponents of a public plan seized upon the hearing, saying it showed why access to healthcare cannot be left to private insurance companies.
"This could reshape the debate," said Jerry Flanagan, a patient advocate with Santa Monica-based Consumer Watchdog.
"When insurance companies go under oath and admit they are canceling innocent patients when they get sick, it makes it very difficult for lawmakers to pass a law that requires every American to buy a policy or face a tax fine. It opens the way for a public option to hold the companies in check."
Rescission has fueled consumer outrage, particularly in California, where lawmakers are considering legislation to limit the practice to cases of intentional misrepresentation. It has also led to a flurry of lawsuits.