committee well please come to order first of all want to as a as a chairman the committee welcome our newest member represented jackie spear who represents the twelfth district of california represent represent spear we're very pleased to have her on our committee she is very experienced as a state legislator and i want to acknowledge the fact that she's now a member of the committee the  today's hearing begins what i hope will be a series of hearings into how the market for individual health insurance policies work the individual health insurance market serves approximately fourteen million americans some members of congress cite the individual market as a model for national health insurance reform yet the business practices of the companies that sell individual health insurance policies have never been closely examined by the congress today's hearing will examine a little known business practice in the individual health insurance market which the industry calls post claims underwriting close post claims underwriting is a sanitized name for an exceptionally offensive practice retroactively denying health insurance to people who get sick and when they get sick most americans who have health insurance get that insurance through their employers or through government programs like medicare for medicaid or tri care americans who are fortunate enough to have group insurance are not at risk for post claims underwriting group insurance coverage can be terminated when you need it the most americans who purchase health insurance in the individual market face a very different situation in most states insurers require applicants for individual health insurance to feel out detailed application forms that are designed to identify any physical or mental health condition or chronic illness and sure insurers are supposed to then look at the application provided on these forms before approving the applicant for coverage based on this information the insurer decides whether to issue the policy to issue the policy were certain restrictions such as refusing to cover preexisting conditions or to deny the application altogether this process is called medical underwriting and the expectation is that it will occur before the policy is issued or denied post claims underwriting happens after the individual health insurance company has decided to approve a policy and to issue that policy it is often triggered after the policy holder gets sick or has an accident and requires major health insurance coverage to be put into place to pay for the bills the sure then goes back and then goes with a fine through a fine tooth comb through the insurance application to see if there's any technicality that can be used to justify rescind even the policy this happened to two of our witnesses heidi and keith black as are they will tell us how their health insurance was taken away after heidi suffered serious injuries in a biking accident there are sure regions claims that heidi and keith made a mistake in their application for health insurance and then they terminated the insurance company terminated a policy they were left with more than one hundred thousand dollars in medical bills what happened to the bludgers is inexcusable the reason families buy insurance is so that they will be covered when they get sick but regions cancel their insurance when they needed it the most unfortunately the experience of the blasters is not an isolated one we'll hear today that over a thousand a division was in california had their insurance policies inappropriately rescinded and we'll hear about policyholders in connecticut who suffered the same thing one person who was terminated because the insurer said he should have known that his occasional headaches would later be diagnosed as multiple sclerosis i understand that insurance companies need to protect themselves from fraud but that is not what happened in california connecticut or across the country insurers are using technicalities or trumped up misrepresentations to rescind policies after individuals get sick and accumulate hundreds of thousands of dollars in medical bills now that may be a great deal for the insurance companies they can pocket the premiums while the families are well and then cancel the coverage if anyone in the family gets seriously sick but it defeats the whole point of getting an insurance policy in the first place while state regulators are the front line of defense for consumers the federal government is the last line under hipaa the federal both insurance portability and accountability act of one nine hundred ninety six consumers are guaranteed the right to renew their individual health insurance policies unless they have defrauded the insurer or intentionally misrepresented their medical condition unfortunately few consumers know of their federal hipaa rights to guarantee renewability that's because a federal agency responsible for enforcing the centers for medicare and medicaid services has done nothing to enforce those rights or to ensure that states do so of its four thousand three hundred  eighty seven full time employees only four are assigned to administering hipaa c m s has never taken any action against any help insure for post claims underwriting that violates  consumer's hipaa rights are hearing today will examine how the practice of post claims underwriting is being abused to deny coverage to ailing americans we will learn what some state regulators are doing to stop the abuses and we'll ask why the federal government is doing nothing to protect consumers from this practice and will last the health insurance industry's trade association why insurers in the individual market dubose claims underwriting and why it has taken the intervention of regulators to bring an end to this unfair practice in some states these are not academic questions discussions are already underway about how the next congress might best ensure that all americans have adequate health care coverage some health care reform proposals would move millions of americans including many of those now insured through their employers and billions of federal dollars into the health insurance market this would obviously be a radical change in our health care system whether it represents reform is a debate for another day to prepare for that debate however we all need a much better understanding of the individual health insurance market as it currently functions the purpose of this hearing is to begin that educational process and i want to recognize mr eisner for an opening statement thank you mr chairman chairman i'd like to have i ask unanimous consent to have principles for ensuring fair and appropriate practices for individual market policy rescissions and preexisting conditions causes entered into the record at this time without objection they will be doing thank you mr chairman mr chairman getting individual insurance can be difficult in a marketplace the marketplace clearly favors risk allocated or apportioned over large groups losing individual coverage retroactively can put one's life at risk i believe that's the reason for this this hearing today i think it's an incredibly important reason for the  s who are here today and will get it better the pronunciation better as we go i'm sure you have our deepest sympathy clearly mistakes happen wrongdoing can occur and we're here today to try to separate both of  those from the legitimate practice of looking for fraud in applications undoubtedly i'm sure you'll agree in testimony that all three exist people make mistakes people defraud insurance companies and insurance companies make mistakes or use practices in some cases that are clearly wrong and self serving so i appreciate the committee covering this although his jurisdiction is extremely limited and the administration of both president clinton and now president bush have seen fit to the little or no federal wrongdoing that doesn't stop this committee from seeing whether in fact two administrations have been wrong and perhaps create an opportunity for the next administration to get it right certainly the witnesses today from california and connecticut will be very helpful it's very clear that although people who are victims or alleged victims of misconduct by health insurance carriers are important to hear from it's also important to hear from as many people who are advocates who are responsible for administering the fair the fair use of these opportunities on both sides only state regulators have primary jurisdiction their goal the goal of the people of california connecticut and all of our states is in fact to guarantee consumers the contract sanctity necessary in a health care arrangement consumers clearly need access more access to and more awareness to this process growing problem that an individual health care application could in fact retroactively be denied it's not uncommon when people are filling out applications for people quite quite harmlessly to gloss over or not take time to mention that they had an injury or an illness decades earlier that clearly should not allow a tech a technical and unrelated cancellation to occur we have an industry in america that's under considerable assault with rising cost and limited ability for individuals or even companies to pay i join with the chairman in recognizing that with forty four plus million uninsured americans the last thing we need to do is to have people doubting whether it's worthwhile to get insurance to begin with very clearly unless people can count on contract sanctity it is likely that we would only increase the number of people who choose to put the money into a savings account or spend it rather than make that investment against the rainy day occurrence of an illness or injury mr chairman as we talked earlier at this time i would like to ask unanimous consent to have our witness from the third panel so closely related to the industry and to the regulators stephanie can whit be allowed to be on the first panel because we believe that it's the only way to have a fair back and forth during the evaluation and it will save a considerable amount of time the suggestion that you're making and requesting by unanimous consent is one that we've discussed and as we looked at organizing this hearing we think we've organized it in a way that's fair to everyone who will give everyone an opportunity to speak if we could put everybody on one panel but c m s didn't want to be on with the state regulators which might have made some sense the insurance companies are going to trade association are going to be on afterwards i don't see why they have to be on this panel and since we've we've always tried to accommodate the minority and staff and witness recommendations and structuring the hearings the best judgment is we've structured it the way it makes the most sense mr chairman since the u c is not agreed to and since the minority disagrees at this time that this is by any means fairness since the panel at this time is your witness the insurance company that why you're here now with the insurance company why don't we hear about this problem and also as a californian to or from the california regulators who i think we ought to be proud of having done the right thing they represent the republican governor let's let's hear from the witnesses and not go through a procedural motion i would urge the gentleman not to try to pursue a motion to rearrange the comm e hearing list i understand your point you have made a point but as i surprised given the chairman to decide the order the witnesses and we've always welcome input and in fact i think we've been more responsive to the input from the minority and when we were in the minority chairman we we did talk about the other alternative which would be to have the state regulators including california who is considering some of these reforms that the association representative will be talking about on the same panel and you also declined that so it at this time i must reiterate my motion to combine the third and first panel i don't know whether it's appropriate even to entertain such a motion let me have our counsel review that advice me i've never i have never in my thirty four years in the congress ever had a member or seen a member make a motion to stop a hearing for witnesses by asking that they be rearranged in different panels or different positions i never seen it it's the first time i think it's quite inappropriate because we're trying to get the witnesses the opportunity to be heard members of the committee have not been informed that there may be motions before us today this is a hearing and not a committee meeting i will will recognize himself in opposition to this motion i think it's quite outrageous to make a motion on the basis that the insurance company is being relegated to inability to make their case because they're the last ones to speak i think what we need is to have an opportunity to hear all the witnesses and it's the progress of of the chair to to make this  and their representative trade association have answers to many of the questions regulators have questions to be answered the banter between the two was not and i pathetic over qwest but in fact one that i believe very strongly would promote a better dialogue the progress of the chair in under the house rules and the committee rules is relatively limited the ability of the majority to by vote do what they want to do is pretty absolute today we make this request mostly because in fact your party said that you wanted to come together our party did lose the last election we want to work with you this is not an adversarial hearing and it should not become one this is a hearing in which we're trying to find ways to fix a real problem we have real people here who were adversely affected on it by the regulators that are here today are here with hypothetical  proposed answers in order to keep this from happening in the future and they will in many cases need legislation and perhaps federal help to do so the insurance association representative that we chose to have here we want them to be answerable for this  want them to be part of any solution that's necessary in our free market mr chairman you did mention that you thought the motion was not in order i might remind you that when you were in the majority minority you made motions for subpoenas or threatened to make motions for subpoenas at hearings like this this is an opportunity a scheduled opportunity we are all given notice that that in fact the hearing and subjects related to the hearing may very well be brought up as chairman i'm very much believe that we should look to redo this panel to make it more equitable and more effective i'm happy to work with you on any compromise but i don't believe that we were properly recognized in the process of finding an acceptable panel that would be beneficial to all the individuals who are going to spend their time on the day is here and for those individuals and representatives who are here today to give testimony and to question settlements made his case the issue before us is a motion to rearrange the panels all those in favor of the motion offered by the gentleman from california mr i said will say i all those opposed will say you know when those have emotions not agreed to that  chairman on that i have to ask for the aides in a all those in favor of the s and they raise your hand and insufficient number and the motion requests for roll call is not granted now why waste your chairman i appeal the ruling of the chair you would go that far to keep us from even hearing these witnesses because you're worried that we won't be here to hear the insurance company well we won't even get to the insurance company if you drag out this hearing this year and i do not want to drag out the hearing i will those in favor of a roll call vote raise your hand and insufficient number the request is not granted now we will hear from our witnesses the the committee will receive testimony from heidi and keith lazarus who from logan utah they had their health insurance policy retroactively rescinded by regents blue cross blue shield of utah after heidi was in a serious biking accident they will explain the circumstances and consequences surrounding the reception of their insurance covered bail bond or as secretary of the business transportation and housing agency for the state of california mr bonner was appointed by governor arnold schwarzenegger in march of two thousand and seven and oversees thirteen departments including the department of managed health care he will testify about the actions his agency has taken to help consumers who had their health insurance in appropriately rescinded cindy is the director of the department to manage health care was initially listed as a witness but she was unable to appear this morning because she is in negotiations with two remaining large anthem blue cross blue shield of california on this issue mr connecticut's lead advocate for patients and their families mr limbaugh will discuss connecticut's experience with health insurance receipt and what steps connecticut has taken a policyholders and prevent future it's  policy of this committee that all witnesses that testified before us do so under oath so i'd like to ask all of you if you would please stand and raise your right  detailed paperwork on one of the forms keith marked that he had a history of back trouble but wasn't sure what to write in the comment section on the back and he consulted with doug who knew all about keys back history having similar difficulties with his own back over the years and quite recently they discussed and compared those similarities including medicines and doctor visits after discussing keys that you're one of our agents wrote an application that keys had a quote slipped disc in back had surgery nine hundred ninety six full recovery close quote doug assured us the paperwork was filled us satisfactorily and we trusted his knowledge of what information insurance company needed he's had surgery nin ninety six for herniated disc and went three years without any pain or trouble of any kind later keith pulled his back playing basketball and developed back pain that as dr helped him control of medicine he has since then carried on as normal active life including his job and floor involving hard physical labor a wide variety of rigorous activities such as hockey snowmobiling and being an active member of a search and rescue team the medicine and doctor visits were detailed by the nurse on another form we thought all the for were being used together with our medical records which we signed a release for the insurance companies to use to make their decisions we received a letter in march of two thousand and five from regents indicating their application had been accepted and we had health coverage on aug eighteenth two thousand and five i was in a bad mountain biking accident i broke my neck in two places in my back and five had a pulmonary contusion a few broken ribs and a brain injury search and rescue got me to where i could be life flighted to a trauma center and placed me in intensive care unit had to have several hours a nurse surgery on my spine when i got out of the hospital i had to stand a rehabilitation unit until i was good enough to go home my medical bills were over one hundred thousand dollars in november just when the scope of the bills was becoming apparent regions notified us they would be looking into our medical records and then in january two thousand and six regents notified keith and i that they were rescinding our health insurance policy retroactively they claim that he's failed to provide information in the application about his back regions did not respond to our attempt to talk with them to find out where the misunderstanding came from troy delayer the senior agent also attempted to clear things up with regions communicating to them we had no intention of misleading them regions had accepted the claims and paid for case medicines and doctor visits without any problem for most of year having signed the release of records at the time of our application and being open the agents in the nourish we had no reason to suspect regions was missing any information only after the bills from my accident were mounting did they notify as of a problem later we learned that they had not received the nurse's report detailing  and doctor visits and went to life insurance only and that these things should have been included on the form that had helped us fill out had regents returned a copy of our application with our health care policy as prescribed by law at the time of our acceptance we would have had the opportunity to question where the rest of the paperwork was and perhaps avoid the future confusion i hope insurance companies such as regions will be prohibited from rescinding insurance coverage without making a thorough inquiry into the facts and circumstances surrounding that location of the insurance in our situation was completely inadequate to simply look at the application compared to medical records had regents understood all of the facts i do not believe they would have felt it was appropriate to retroactively counsel our coverage and i thank you for the opportunity to appear before this committee right information by our circumstances and i are hardworking responsible citizens we've never had any trouble with our creditors before this time or with the law i believe that regents is taking advantage of the situation to avoid paying the large medical bills for my biking accident any help that you can provide to making sure that these are unethical practices do not continue in the california's business transportation and housing agency some years ago i was the h m o regulator in the state of california and now as secretary i oversee the department of health care and number of other regulatory departments with me what you in your in your opening comment noted is a very troubling practice occurring in california and we're sure across the nation by way of background we are getting aggressive in this area in two thousand and six when we saw a number of complaints consumer complaints and an increase in litigation and so the department an issue that it would probably have been the largest investigation of this practice in the nation looking at the five  largest plans that provide the most individual coverage in california that would be anthem blue cross blue shield of california kaiser the care and health net and we think that since we started getting involved we have seen dramatic changes in industry practices we've seen about eighty one percent drop in rescission is just in the first year alone and we have continued to focus on the area because was noted earlier this is a particularly harsh practice that it backs individuals because unlike having your insurance policy cancelled which just means that you have no coverage going forward in this case rescission results and the entire withdrawal of your coverage even going back and so you it leaves the member in many cases and limbo relative to existing or ongoing treatment and also at risk of being in some cases bankrupt as a result of substantial legal bills going back in time and so we have continued to focus on these practices intensely we don't deny that health plans have the right and in fact the responsibility to take a look and try to police inaccurate statements and applications and to make sure that everything is appropriate but we have been concerned about what appeared to us to be little or no consistency in their processes or procedures for investigating these issues and that medical history in determining whether to rescind coverage the department investigations and actions to date have included a total of about three point one million dollars in fines and we have brought about a number of procedural changes in health plan practices and we have have rollback in a number of rescissions working with our state attorney general and department of insurance we have been able to work with the industry in making sure that insurance applications are much more transparent and everyone has a much more clear understanding of what's required in the upfront review process a final point that or a couple of final points one is that in april of this year the department announced that we were going to take the issue a little bit and actually go back and review each and every individual case that was in fact rescinded dating back to two thousand and four and that announcement prompted a number of the plans to come forward and offer settlements will be reimbursed or paid by the plan and additional compensatory damages can be gained in arbitration or private litigation if the member so desires unfortunately there are two of the major plans that we have yet to achieve settlement with to date that's anthem blue cross and blue shield of california together they have about twenty two hundred cases of rescission between them and if the if we are not able to achieve settlements in those cases then we will go forward and review each and every case and we think that of course we would prefer not to have that result but if that were not successful there could be very substantial fines that would be  imposed in each of the against each of those plans but in summary we think our breath of action california's achieve significant improvement in the industry certainly in the state and maybe in other states because we have brought end to this very unfair and illegal practice we have been assured that consumers have a much better understanding of what is required on the application at the intake of the point of intake we have been very successful in restoring coverage for the financial number of enrollees who have had their coverage unfairly rescinded in the middle of care we think it's a good thing that we have been able to avoid lengthy litigation between consumers and health plans and more importantly we have restored some measure of faith in the individual market so that those who are go out and buy individual coverage have some greater sense of assurance that the coverage will not be rescinded at an inopportune time on the policy front the governor has signed legislation that prohibits and surance companies from trying to recoup payments from providers after they have already approved or authorized a course of treatment and then subsequently rescinded care he also wants to outlaw the practice of operating bonuses or financial incentives to claims adjusters and others to incentivize rescinding coverage and ultimately the governor wants to see a guaranteed issue in california coupled with an individual mandate because we feel very strongly that that would eliminate the need for medical underwriting altogether in the individual market in the meantime we're going to to force the existing law and we're going to continue to look out for the interest of consumers so that we can not only bring light to this issue but more importantly bring an end to this very troubling practice thank you thank you very much and advocate for those consumers have the growing number of americans who find themselves trying to get and keep coverage in the individual health insurance market thank you for your willingness to shed light on this very important issue post claims underwriting abuse and policy  to be growing and we have a witness speaking to the microphone i cannot hear the result of this process and the particularly egregious result is the unjust rescission cancellation or limitation of health insurance contracts after someone is diagnosed with an illness and faced with expensive medical care in connecticut we were fortunate and identified this problem in our market beginning in two thousand and three my office the office of our attorney general richard blumenthal in our state insurance department saw a jump in complaints from consumers whose policies were rescinded or limited in some other way they were sick and didn't understand whether coverage is taken away or limited ultimately a coordinated and successful effort by our offices undertaken to fix the problem through legislation connecticut's law an act concerning post claims underwriting is the product of three years of work at the legislature to protect consumers from unfair health insurance rescissions cancellations or limitations under the connecticut statute insurers now need to seek the approval of the connecticut insurance department before they can rescind limit or cancel a policy want to be clear at the outset that this public policy debate is not about consumers who intentionally misrepresent their health status  red herring that is used utilized as a distraction by those who would rather not have this conversation further we could spend a day arguing about what motivates the desperate albeit infrequent action to lie on an application instead i'm focusing on those  policies were unjustifiably rescinded cancelled or limited by carrier to avoid paying claims in connecticut a company denied claims for a resident named maria who was diagnosed with non hodgkins lymphoma in two thousand and five the insurer said maria should have sought treatment and found out the diagnosis sooner in other words before seeking a policy once the company started receiving her medical claims it found out she had gone to the doctor for what she thought was a pinched nerve she also told the doctor she'd been feeling a little tired mary said she wasn't concerned about the way she was feeling because she had been working particularly hard tests were done at that time to determine whether there were other issues these tests did not yield significant results and they were not tests for cancer the company denied payment for subsequent cancer related bills saying that maria had this condition before he bought the policy and should have sought treatment maria ultimately died from or illness young man named frank was taken by surprise when his insurance was rescinded because his insure a legend that he omitted material information from his insurance application when frank applied for coverage he disclosed that he had occasional headaches after he applied the carrier obtained all of frank's medical records theoretically for medical underwriting and then wrote him a policy several months after getting the policy frank went for a routine eye exam and was referred to a neurologist by that eye doctor the neurologist diagnosed frank with multiple sclerosis immediately following that diagnosis the carrier rescinded the policy stating in effect that he should have known his hip headaches would have led to a diagnosis of m s carrier stuck to its position even after receiving a letter from frank's doctor saying that there would have been no reason at all to s s since frank was an otherwise healthy young man with a normal exam frank was now responsible for more than thirty thousand dollars in care that he could not afford his condition rapidly deteriorated forcing him to end his employment and seek public insurance and assistance these are the kinds of people who are impacted by post claims underwriting abuses and that impact is medically and financially devastating unfortunately whilst insurance departments can often intercede in these cases through market conduct examinations under their existing laws against unfair insurance practices there is little that can be done as regulators to make it right for these consumers at least completely as state regulators regulatory agencies they can fix problems going forward making it safer future consumers are limited in what they can do now relative for these relatively uninsured consumers who are back in the marketplace states need to stop this problem on the front end with good we are a law that prohibits these abuses and forces companies to seek permission before sending a policy the practice must be stopped on the front end because the clean up is almost impossible in connecticut the insurance department recently concluded a very long and deep investigation of assuring companies in particular time insurance formally fortis and john all than the resulting in a record fine for connecticut of two point one million dollars in fines and nine hundred more than  hundred thousand dollars in restitution to consumers the department did all they could but the damage to the individuals in fact was done although the company admitting no wrongdoing they agreed to pay the fine and restitution chairman it's my opinion and that of many of my colleagues that our states need to move rapidly to address the issue of post claims underwriting to my hope that legislatures across the country with your encouragement will take the following steps to protect consumers and ensure a level playing field in the individual market we need to create and adopt a state or national uniform application for individual insurance that's clear easy for consumers to understand and takes out some of those trip trip ups that do occur in the application states must define medical underwriting and be clear that the review of the application alone is not sufficient for their states must require that underwriting be complete and all outstanding questions be asked and answered to satisfaction for the policies written and finally there should be creation and option of laws to stop place post claims underwriting abuses and provide greater limitations on a company's ability to rescind or limited policy without a finding of fact and approval of the state regulator since passage of our connecticut post claims underwriting law complaints from consumers have dropped to a handful and the insurance department has received no requests to modify or recent policy thing to speak to the effect of a good law yet to be tested but i would correct my colleagues in other states to join us in ending the practice thank you i want to thank all of you in this panel i think it's a panel that made a lot of sense because you're all explaining the problem to us and you're all advocates if not the victims trying to do something about the insurance company practices to take away sure it's when people need it the most it really is astounding and what you've described mr or mrs black is horrible when you're sick that's when you want that insurance coverage to be there not to have to have insurance companies come in and take it away from you and then you're stuck with the bill which i think in your case was one hundred thousand dollars is that it's not right well people think they get insurance coverage and insurances insurance but the reality is that most people have group insurance and group insurance spreads the risk that the private insurance policies try to avoid the risk they try to avoid the risk by not insuring people who have been sick if if they in fact have been check or saying that they've had an illness they won't cover any treatment for that illness if someone's had cancer and they ply for a  private insurance policy and of course they say they have cancer because that's part of the questions that are asked they may be told will insure you for everything but cancer well that's that's the that's the business arrangement that can be agreed to there's no  government requirement to do otherwise if it's a private insurance policy but if one state asked those questions and all the information has been furnished they  company can deny coverage of an individual but if they agree to cover the individual they shouldn't be they shouldn't be coming back afterwards when they get the bills for medical care and saying oh we're rescinding the policy and it sounds to me like in many cases it's a trumped up argument is that is that your experience mr lemon you just went through a lot of horrible examples of people who have been denied coverage after they already had the policy been paying for it on trumped up charges is that fair to say anything in some cases it is fair to say i think in the case of the plethora that certainly sounds like what happened we're looking at a case now that's under investigation where a person's policy was rescinded and she was in a hospital bed being treated for cancer but the rescission was based on information that was not disclosed around hypertension under normal circumstances and without that specter of a large claim coming in and might have simply limited the coverage to exclude anything related to that hypertension rather than person the whole policy and tell me again that there is a somebody was denied health care coverage and had their policy rescinded because when they put on their application they had occasional headaches that that person was supposed to have known that later he would be or she would be diagnosed with m s is that attitude have known that it was a large enough problem that she should have sought additional medical attention as i stated she didn't think it was that big of a problem that's really astounding to me and there are members of congress who are not aware of the fact that individual health care policies health insurance policies are different from the group policy now let me just say this to you and anybody watching this hearing if it weren't for a free press the l times particularly doing a series of articles about this issue i don't know that the state of california officials and others would have realized what a problem it was but when the regulators in california and connecticut and utah saw what kind of problem was the regulators came in and tried to do something to protect people were drawn to do the same thing here with this hearing because there is a federal law called hip that's supposed to stop insurance companies from carrying on these and we're going to hear in the second panel from the center for medicare and medicaid services they didn't want to be on with anybody else they represent the bush administration they didn't want to be on a panel with anybody else we could have had them on with the regulators but they didn't want that i just can't tell you how pleased i am you would be willing to come and talk about this is  not a happy situation in your lives to have your insurance coverage cancelled on you you certainly believe you were not treated fairly is not the case certainly not world well this committee is going to open an investigation into the practices of the private health insurance market we're going to be sending questionnaires and document requests to the major health insurers to get answers to these questions an opportunity to a rescission to an objective panel that includes a doctor and a lawyer which would have the power to reinstate the policy and media so you get an appeal to an independent group including a doctor and a lawyer and even if you lose that you can still sue would take away your right to sue if you were to lose that panel but what it would allow is it would give you an independent group to take a look at something like this very very quickly because having to go to court is a long even if you win you lose because you've got carrying costs and you know sometimes getting the care you need meantime had that kind of option been available to you publicized problems with rescissions do you think that the federal government should take over in force and hipper protections being a federal law i think it would be an appropriate thing for the federal government to be taking a hard look at  from the state regulatory perspective under what circumstances should the federal government take over state regulation in the individual insurance market for failure to substantially enforce hipaa what i think a very difficult  thing to be looking at beyond that i'm not sure if you're suggesting the state taking over certain aspects of our not seen or other insurance regulation the problem always is if the federal government isn't doing its job sometimes the states better off in a state like california sometimes states don't do the job and that's always the dilemma in terms of you federalize something like that or give it back to the states  mr limbaugh let me ask you from a state perspective under what circumstances do you think the federal government should step in and take over state enforcement of protections like mr boehner would have to  say i'm not sure on its face what those circumstances would be we would want to preserve the right of states to regulate insurance as they are doing now i think the federal government has a role in encouraging better and stepped up in help insurance market is regulated almost exclusively by states c m s is responsible for making sure that states in force protections that are contained and have that's the current law only if the states fail to that there was in force and activity around connecticut's existing unfair insurance practices law those laws exist in most states because they are based on in the i c model that's been adopted by both states and give the states a lot of opportunity to regulate around this issue without naming it specifically i think at this point the conversation that happens on an ongoing basis between c m s and the any i see around ways for those two groups to work together to make sure that there is in fact get both health and life insurance is that right yes and you met with an insurance agent who was fully informed about your health including your back is that right yes they were friends of mine and in march two thousand and five regions blue cross blue shield issued you an insurance policy you remember how much you were paying in premiums i think it was in the three hundred dollars range but you paid them oh yeah and i'm glad that in october you had a serious fractures which shattered the bone at the point of greatest impact i also had a pulmonary contusion three broken ribs and a brain injury several hours of neurosurgery were performed to save my spine i spent three weeks in a hospital in a physical and in physical rehabilitation unit and i'm continuing to do physical therapy my medical bills over one hundred thousand dollars is that  impact has this incident had on you and your family and can you tell us a little bit about it you know what happens so often i mean we and i was very glad to hear mr bonner says a moment monium mr lim limbo but what happens too often is that the insurance companies collect and then when it comes time when somebody is going through a nightmare the very thing that they paid insurance for they then suddenly go a w o l and individuals like you are left in pain and suffering and as i listen to mr limbaugh's testimony one of the things that i like about the connecticut system is that they have to have basically pre approved before doing the resending is that right  very few complaints from consumers is that right that's correct and why do you think that is i think sometimes the best law never has to be enforced what do you mean by that having good law on the books will often put an end to certain behaviors that are questionable and ever get to the point where it has to be inforced and this maggie was there and the fact is is that you know when you think about a person going through the trauma of the or somebody who walks into a doctor's office and i've often said that we are all one diagnosis from disaster but they walk into a diagnose doctor's office and the doctor say god forbid give them a  diagnosis of cancer they've got to have surgery radiation chemotherapy and but it is saying time they've got to tackle the question of an insurance whether insurance company is going to pay as a major problem is it it is do you see those kinds of situations mr mr boehner in your experience situations where the insurance company just refuses to pay yes all of the previously incurred medical bills that is correct yes i mean you see that that's often the case is that sometimes what prompts they review in the first instance is the utilization of services so the the big ticket medical bills that sometimes prompt the insurance company to go back and take a look at the application and that then read sometimes results and the decision to resend now going back to the connecticut system do you what is your opinion of that system mr mr brown of what we are taking a look at many of the same types of things we  have already developed a model application that that is available through the regulatory and through the department of health care but we're also looking at legislation that that might lay out an independent review process between yourself and the representative if you will the health care industry i'm going to ask you a series of questions in some cases it may be obvious but remember i'm going to be later asking the health care industry would be do you believe that even if it's joint that greater jurisdiction to the elected insurance commissioner might be helpful in bringing pressure to bear to ensure that these kinds of of selective abuses don't happen you know i don't see that the structure of the regulator itself is being keyed to the solution here i think aggressive enforcement and clear rules and  aggressive force in those rules are really the key if i can get to a couple of those potential rules in fact transferability was an absolute right meaning that no preexisting conditions in california could be looked at under any circumstances as long as you were sure would an absolute statement of that in all fifty states be helpful if you're saying event essentially people having to if they're continuously insured having issue as long as someone didn't have a break in insurance when they went from a group insurance to an individual insurance their background would be prohibited in other words if you will in a signed selection that if you want to do business in california you have to  ccept anyone who's going let's say from a cobra coverage having left him for they did have care to an individual we have that right as a condition in california with that with that in fact distribute the risk in a way that would be there but at the same time prevent a huge amount of people having to deal with their in some cases preexisting conditions i think as i understand the question one of the things that that you would be concerned about when he referred to distributing the risk is  to i want to get to that but this is assuming people coming out of the distributed rest secondly limiting preexisting conditions to two ones which are chronic and life threatening other words the state could could eliminate conditions that are unrelated to the claim from being allowed to cause cancellation of the claim state could do that just yes or no it's certainly within the power of the state they can do that yes or no if you don't mind a good idea is it a good idea you know there have been specific conditions any may speak of this that are but there are specific conditions where the legislature has made a determination that th y are not grounds for cancellation or rescission and in this case an accident and other words an event which is dramatic in its nature probably first and foremost among them that that even if you knew you definition wouldn't it wouldn't that be one of the first ones that california should ensure would not allow this retroactive cancellation i agree with you that an accident should not be grounds for a cancellation or for recision yes ok once again mr mrs you have our deepest sympathy but recognition that you shouldn't have to be here today this shouldn't have happened and i appreciate the chairman's willingness to try to bring focus for change and operates and i'm going to have to go to a conference committee that i lead with the senate not to call it the same time but they didn't pay attention to that so that's why i want to speak out of order  there's been another request of changing the panel and mr davis said perhaps we could put the insurance companies with c m s now i suppose we could have put everybody on one panel and we could move this hearing but i really don't think that makes sense because c m s is the regulator and as the regulator for the federal government they didn't to speak in this question so we had this panel which we thought made sense to put you all together we have c m s next and then we have the insurance companies now there's a concern on the republican side of the aisle that people won't be back for the insurance companies they won't be here for the insurance companies but we only have two republicans here now and i hope they'll be here but i don't see republicans rushing into to be here at all at the moment but they do have conflicts in this schedule we have and i'm going to stick with what we have even though this request has been made because i think what we have makes sense i will certainly try to be back here for the insurance companies that i particularly want to hear from them and ask in the case of doing with hodgkin's lymphoma a thirty four year old woman it was it was a straight preexisting condition charge on the part of the insurance companies they said that she should have sought treatment because she had experience minor shortness of breath while exercising shortness of breath while exercising that's correct was there any connection between her shortness of breath while exercising and the simply say awareness meaning that we have done a lot of work over the last several years to increase consumer awareness of what their rights are and made it easier for consumers to make and bring complaints not necessary legal complaints but just compliance with the regulator and their health plans so i think all those things in and in addition to the private litigation that we've seen the more that you do to shed light on the issue and  representatives here in washington and i for one have absolutely no prob individual citizens coming to washington the stories of individual citizens being told here being given preference  to corporations will have every opportunity after this panel is done to reach out to the members that didn't get to make it to this hearing and make their case i think that is how hearings should be run i think we should hear all the evidence but i have absolutely no problem with regular average everyday people getting a little bit of preferential treatment in terms of how the stories are being told here given that they don't have the type of representation that others do mr lembo first of all i want to thank you for coming  there that don't have the new statutory structure that we put in place in connecticut where the tools available to you before this law passed to the insurance commissioner when you were receiving hundreds of phone calls what was the don't and i think that's mostly because people don't feel empowered to fight that big fight and also maybe second guess themselves did i complete the application appropriately is the company right that said as i mentioned  earlier there are model laws on unfair insurance practices in most states in the country they are very useful some of our cases were able to utilize pieces of that law to get an appropriate outcome for consumers but in others we were not it wasn't until we had very doctors themselves that they should have known that something was wrong and should have sought treatment and help before they submitted an application enough that we now have insurance companies acting is doctors and now we're asking the consumers to be doctors as well i guess the question is what kind of normal medical underwriting would we expect and is a question as well would we expect of an insurance company there was certainly a growing body of agreement around what real medical underwriting is i think it's fair for a company that is faced with an application that has no flags and there are no yeses to any of the medical condition questions  go forward with that application under certain circumstances but any as you mention any of the things that you mentioned should cause the company to then seek the medical record and investigate further and once they complete medical underwriting in the academic sense medical underwriting not a shorthand medical underwriting that is just a review of a screening tool which is what the application is in a rush to sort of own on a market in a particular state because it's a lucrative market if we get there i think we will see a lessening of this issue and frankly definitely want to be reasonable inquiry into those issues that may be suggested on the application itself i think the other thing that is very important is to look at the qualifications of those who are actually doing the review as well because one of the issues that we have found is that in many cases the person reviewing the application and the information may not have the necessary qualifications to determine whether they should be making further apologize for coming in and going out and coming in but again a number of hearings are taking place i want to welcome the regulators from california here it's great to see you again congressman bilbray to ask the question that i think needs to be explored a little r that is certainly true that we have much greater saturation of managed care in california than you and other parts of the country so it would suggest that in areas where there are a larger penetration of individual health insurance that this is going to be a problem obviously it's a problem in the individual market not in the group market so in states across this country where individual health have a greater penetration this is conceivably likely to be a problem i think that's a logical assumption to make in the absence of information to the contrary and in your assessment in california of identified a number of engaged in this practice do you have any reason to doubt that it is a practice that is embraced by to you and i don't think we want to see that happen to anybody else and we'll do our very best and i thank the other witnesses providing the testimony this is the united states of america of america we can do better by our citizens and to day operations and lead new policy development with respect to individual insurance market issues within the agencies as well as with respect to private plans in medicare portability and accountability act of one to ninety six hipaa is very clear that with limited exceptions an individual insurance policy holder has a right to guaranteed renew ability in other words an insurer must renew or continuance for an individual's existing coverage unless the pacific exception is met the most relevant exception for purposes of today's discussion is if the policyholder fraudulent or made an intentional misrepresentation of a material fact under the terms of the fails to substantially enforce the standards the united states department of health and human services has authority to investigate and if necessary take over direct enforcement of the standards in that state while there is federal oversight authority there is no direct federal role in regulating the private individual insurance market it has been suggested that a certain private insurance issuers might be using a state contract law concept to circumvent guaranteed renewability the role  in addressing such situations hinges on the specific facts of the situation including any action already taken by the state if there is any indication that may be occurring for reasons that are inconsistent with the hipaa guaranteed renewability standard that would be a red flag that the state may be failing to substantially enforce  standards c m s could then begin a process that fourth in our regulations to assess the state's compliance with hipaa requirements depending on the outcome of our the national association of insurance commissioners a stablished a work group in may two thousand to examine and develop recommendations relating to the in the individual health insurance market will do whatever is possible scope of our jurisdiction to ensure that they are substantially enforced protect thank you for the opportunity to testify today and i would be happy to answer any questions you may want to thank you very much for your testimony let me just ask you there is a federal law here back of nineteen ninety six that sets a clear federal standard  national problem not one limited to their particular states and in many states such as utah where the blast lost their coverage there has been no state enforcement now tell me authority to step in when a state doesn't comply with a federal standard which is tied to the constitution of fraud or intentional misrepresentation and law which  case of the does not have that same federal standard of fraud or misrepresentation fact that allows for the insurer to discontinue a policy simply made on material reliance with or without  any intentional misrepresentation and so it appears and i know you may not have had the chance to take a look at it certainly appears from our reading that there is a clear statutory conflict between the law in utah that controlled in the case of the bizarre and the federal standard and so it would seem given the fact that we have here today at least one example of a state law which stands in direct conflict with federal law that may be a first step might be for the agency to do a review of the fifty states so it's probably not that hard to go and take a look at all of the different statutes that control here and determine which states by the very definition of their statutory treatment of this issue are probably and they have one life to live this is no dress rehearsal and this is a line and i just have one question for you it right this block we believe that the state of utah has not done what it's supposed to do in this regard would that trigger an investigation from you that's all i want to know working for them and you just sat here and said you needed a complaint and i'm asking you these are just regular everyday citizens who did everything they were supposed to do and they feel gentlemen for statement with all due respect let me just say this and i will be extremely brief because mr davis has asked me to move this hearing along and i will do that but it will be clear mr black on the sworn testimony said a few moments ago that there were certain things that were under her jurisdiction number one number two she said there were certain things that would trigger an investigation of those things under her jurisdiction that's number two number three and what she is paid for which he has sworn is her job i simply wanted to get some answers to a question of a couple that by the way at the beginning of our term we raise our hands and swear that we're going to protect the american people i want to make sure that this couple is protected i'm not saying the government can do it better whatever i'm just witness and what special counsel to the america's insurance health insurance plans the trade association for the health insurance industry thank you very much for being with us thank you very much mr cummings and members of the committee i'm stephanie can win i'm special counsel for america's health insurance plans and we represent the thirteen hundred health insurance plans offering coverage to more than two hundred million americans i heard chairman waxman this morning say that one of the issues primary issues we're discussing is how to ensure that all americans have adequate health care coverage we couldn't agree more they have my organization believes that all americans should have access to coverage and i want to tell you very briefly this morning about two of our proposals for you forming the individual health insurance market which is what we're talking about number one proposals to ensure that no individual falls through the cracks and number two initiatives to give consumers in this market piece of mind including new consumer protections with regard to resurgence and preexisting conditions just very quickly my paper summarizes what the individual market covers who's in it we believe that there are about eighteen million people in there are survey in december of zero seven so it's very recent we found that the individual market is both available and affordable that eighty nine percent of applicants who apply and go through the process are offered coverage and the majority of their standard or even preferred rates but we want to go further we've heard some disturbing testimony rescissions and some very articulate testimony from the connecticut and california regulators we know that resurgence are exceedingly rare our statistics say that it's two tenths of one percent of policies two tenths of one percent we want to make them rarer still we want to make them extinct first rescission would not be an issue at all if universal coverage existed so we have proposed just recently a strategy for individual market reform that would guarantee access to health care coverage that plan would be a public private cooperative venture it would have states create what we call guarantee access plans to provide coverage for those insured with those who are uninsured with the highest medical costs and our plans corella would do their parts with a coverage safety net and a guarantee and guarantee applicants who aren't eligible for the guarantee access plans and there be kept premiums on that second and very critically our board of directors last year recommended important initiatives to enhance peace of mind to those in the individual market we've outlined in our testimony in great detail the numerous consumer centric practices we're advocating and chief among them in the one that i'm most proud of as the position that legislative drafting  which states can use to enact legislation to provide consumers like consumers we heard testify this morning with independent third party review third party review which would resolve any disputes about medical issues related to not only rescissions but also preexisting condition exclusions and our policy our proposal goes even further than connecticut because it would be independent of the health plan and it would  involve both a medical professional and an attorney expert on the air in the that particular area and any decision any decision this is critical would be binding on the health plan the other key initiatives that we set forth in our testimony a number principles i made them seven separate principles about rescissions we believe that the health plans have very serious responsibilities first of all they should take responsibilities and you heard this reiterate some of the testimony this morning for conducting a thorough thorough review questions asked in an application and if the plan failed to conduct that thorough review unclear on clear or questionable information and failed to seek additional information then the health plan cannot use that information as a basis for rescinding coverage just quickly on a final note we are trying to come our association is trying to come up with policies solutions that work both immediately and in the long term our proposals which we detailed in the testimony take account of state reform efforts over the last fifteen years they were very well intentioned but we cited a report we just did last year by milliman which found that even these well intentioned state efforts at reform in the individual market and i'm talking about guarantee issue without a requirement for individual coverage or community rating had negative consequences for consumers higher premiums declining been here i've been here all morning and it's probably all of those insurance companies a part of your association the ones that you heard mention i believe so yes and as i listen to your testimony it was quite impressive and you talk about things that  you all would propose and i'm just curious why haven't you all done some of those things i mean some of these things you don't need us my friends on the consciously say in the congress that if they can do it in private industry let private industry do it and i've got a couple sitting behind you who's facing a hundred thousand dollars plus in bills and counting after having paid their premiums and i'm sure they're saying what it all sounds nice but what about us i mean you follow what i'm saying so why haven't your folks done this before i mean it's just sounds good and it sounds like this is something has been on the drawing board mostly things for a while or are these things that just came up when did you all come up with these are boards or came up with this last december we publicized this material last december  minuscule number of people that may be affected by this but those people are in pain those people are suffering just like this couple suffering and and we have faces to put with the failure to institute these policies and i'm just curious when do you anticipate that's going to happen well we hope any of them we help to make what happened this morning for example and never a vent  some of our health plans for example have already instituted these policies in terms of the underwriting standards but we are also working with the state legislature to implement the issues that i talked about the third party review which would obviate a lot of the problems in this area it is worked in medical the medical field having external review and this would be third party review for recessions and preexisting conditions now the reason that the insurer agape or resetting the policy that was  that mr the husband is that he failed to provide information in the application about his medical history relating to his back you're the testimony yet the relevant section of the application was filled in by keith's insurance catastrophic event that health insurance is suppose and i'm sure you would agree to protect policyholders against you testified in new initiatives designed to give consumers peace of mind about their to get to the recommendation you had to i guess know that these incidents take place you also needed to know to even come up with that third party proposal you had to know the date there's some problems here and so  why is that why do you think that is because they have their opinion i'm sure and but what what do you think that is sir we're trying to fix it we want to make sure that what happened to them does not happen again in the future asking affirmatively our member health anything to do with money i can't i can't speak to an individual situation as a lawyer i try not to opine in an area where i don't know i don't know this except what i've heard this morning in the testimony which was very disturbing under our proposal they would have gone into the guaranteed access plan that we are supporting very strongly here where the state and the private plans would get together and assure coverage for every single person so no one falls  proposal would happen northeast ohio mr chairman metro health has been struggling with enormous growth in the cost of uncompensated care in two thousand and seven they're left with ten million dollars in bad debt alone which forty seven million uninsured dealing with people who may have preexisting conditions but they have to be able to get insured or they're going to fall not only into personal bankruptcy but they're going to fall back on to the state anyway you know i for one believe that we have we have a universal health care system it is the worst possible universal health care system because what it what it really says is everyone will have insurance but it will be at the emergency room as a californian and i'm particularly sensitive to the fact that it's very expensive to deliver that care the wrong way rather than the right way on the earlier panel that i had hoped to have you on at the same time i asked a series of questions and they they were probably less tough on the regulators and they will be i knew the first one would be why wouldn't it be fair for a state or if you will all states to simply assign to every company based on the percentage of the market cases with preexisting conditions and essentially either with or without the participation financial participation of the by the way hipaa provide some protection on that in terms of the portability of your continuous coverage credible credible coverage the continuation of that has made a huge difference in the market let me ask you about e don't need to underwrite if you have coverage for every one of one hundred percent of the market of coverage covered underwriting is never necessary underwriting is only necessary when you have a market such as this which is voluntary and consumers get to choose and  when they want to buy health insurance and it's really not fair to everyone else in the market and everyone else who has to afford premiums if a person can find out he or she needs major medical services and then decide to buy health insurance policy why would you under the of well we might we just haven't taken that position because we really don't go there we figure that's really up to state insurance law to find a situation where more interested in the twenty thousand foot policy and view of how to make it  rare or non existent to incorporate that in your policy i don't quite see how the policy can be considered a rigorous one without that component to of the initial application correctly so that all the analysis is done there and i would suggest to you that it's an incentive to do that that work on the front end if it's ensure that the only basis for which they can rescind later would be willful misrepresentation because you would catch the innocent mistakes presumably if right if you were doing a thorough review up front so one of the reasons i'm encouraging you to follow the example in the voluntary policy that you're putting forth of states like california has made it a requirement that it's got to be a willful misrepresentation is i think that that actually encourages the insurers to do the upfront were much more diligently and in the absence of that policy they won't do we'll be back in the same situation again thank you thank you very much let me make one correction mr ice made a statement with regard to the jurisdiction of this committee absolutely we will do that i thank you very  the board in december i don't have figures for you i would know thirteen hundred members many of them a majority i would guess do not even write policies in the individual market so they wouldn't even be relevant to them  rescission doesn't occur in the group market by and large because the group market is not underwritten so they don't even apply but i don't have an exact figure for you about who was adopted and who has and i will say that our board of directors  made up of the presidents of all of our big member companies have adopted these principles and believe that this is the way to go well the reason i ask this question is that judging from their actions it doesn't seem like all your members on board and try to understand it we've all learned a lot of today's hearing about the abusive practices of some insurance companies which are dropping coverage for sick people just when they need it the most we've also discovered that there is much we don't know about the nature of these business practices and the scope of this problem throughout the country it's important this committee finances to these important questions and so we will be opening an investigation into the practice of post claims underwriting by  just want to follow and i want to thank you mr beer for rain or using that i'm hoping that you will look into their case and try to help them behind us it is getting to people who are in pain you can call it two percent you call them whatever you want to call it but the fact is that they are americans who are suffering and we're concerned about the two whatever percent of of a percent that you're talking about because they are the ones who got to pay the so i know you talked about some things that you all want to do but i am very pleased to hear that you are going to look into your case and we are hoping like you hope that we won't have to have these hearings in the future and said we can address these  you begin your tenure as a member of congress just a few months ago but you bring many years of legislative experience to the table from your service as a former counsel of the late representative leo ryan has been your experience in the california state legislature which from my own experience is a good training ground for congress so we're delighted that you're here your commitment to improving health care protecting privacy looking out for american consumers are going to be an asset to this committee and i know all members are looking forward to working with you