Blue Cross To Stop Canceling Policies

by Julia Rosen [courtesy of Working Californians blogs]

Blue Cross had been canceling thousands of policyholder's coverage, once they submitted claims, over minor and inadvertent errors. The tactic is widely known and deplored as "use-it-and-lose-it" health coverage. In order to settle a class-action lawsuit, they have agreed that they must show policyholder deception before final termination. However, the burden of proof is still on the consumer not the insurer. LAT:

"This is a very significant consumer health victory … something we believe they should have been following all along," said Cindy Ehnes, director of the state Department of Managed Health Care.

The deal is expected to send shock waves through an industry that had stood together in defense of insurers' ability to retroactively rescind coverage for any application omission, even honest mistakes. Blue Cross is by far the largest insurer in California's individual market, and its corporate parent, Indianapolis-based WellPoint Inc., is the nation's largest provider of health benefits.

It would be nice to see some other companies, including Well Point step up and agree to do the same on their own, without the threat of class-action lawsuits. Unfortunately, the health insurance industry is only known for making reforms when they are on the other side of a pointy stick.

This should encourage more people to actually use their insurance. Too often those with individual insurance resist going to the doctor over minor ailments for fear the company would cancel their coverage.

Don't expect Blue Cross to magically reform over night. They have a nasty history of not living up to their agreements.

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