Rescission, the insurance industry practice of revoking policies of customers who'd provided false information, is gaining prominence as a potentially double-edged sword in the health care debate. Rescission's critics are loud and many, and not just among pundits on the left -- a House oversight committee recently unveiled a close and critical look at the practice. Is this an argument for health care reform to be even broader? Is it a way for opponents to drive away more support for the current plans? Let's start with an easier question: Who will defend rescission?
The industry, at least. Don Hamm, the CEO of Assurance, an insurance company, told a Congressional committee:
Rescission is rare. It affects less than one-half of one percent of people we cover. Yet, it is one of many protections supporting the affordability and viability of individual health insurance in the United States under our current system.In a post that's drawn wide attention, "Taunter Media" crunched those numbers, evaluating the top one percent of insurance users who consume the most insurance:
That top one percent, the folks responsible for more than $35,000 of costs - sometimes far, far more - well there, ladies and gentlemen, is where the money comes in. Once an insurance company knows that Sally has breast cancer, it has already seen the goat; it knows it wants nothing to do with Sally.He concludes that as many as half of that top one percent of health care consumers have their policies "torn up." But Lambert of CorrenteWire noted that ObamaCare won't necessarily solve the problem:
The advocates of the 1000 page public option bill, HR3200, will tell you that rescission won't happen under HR3200. But that's not the burden they have to meet. What they have to show is that there's no way the insurance companies can game their complex, unproven, and Rube Goldberg-esque system to make sure the practice doesn't continue under another guise -- because the health insurance companies are profit-driven (and it's the fiduciary responsibility of the CEOs to make that profit).Some have used this argument to push for broader health care reform, including Felix Salmon, finance blogger for Reuters. "This is a huge problem with any private-sector health insurance," he wrote. "It's essentially impossible to gauge the quality of that insurance until it's too late." Slate's Timothy Noah added this to the case: "An industry willing to play three-card monte with very sick people can be counted on to dream up new and better card tricks." And Jamie Court of the Huffington Post wondered whether defenses of rescission represented the "seven dwarfs moment" of health care, comparing it to the infamous 1994 hearing where seven tobacco executives falsely claimed they had no research showing tobacco to be addictive.
But where are the ObamaCare opponents on this? Even if rescission itself is indefensible, it is just one facet of the health care debate, one that public plan opponents will need to address as it gains steam.