How many times have you heard President Obama say, “Health insurers won’t be able to drop your coverage just because you get sick?” Or Kathleen Sebelius? Or the Democratic leadership in Congress? Or the mainstream news media?
As I wrote at Kaiser Health News the other day, you would think that the private health insurance industry was being revolutionized.
In fact, it has been illegal since 1997, under the Health Insurance Portability and Accountability Act, for insurers to drop coverage because someone gets sick. And even before then, the practice almost never happened.
Think of it this way: Do you think there would be a vibrant, active, ongoing life insurance industry if insurers could renege on their part of the contract after someone dies? How many of us would buy fire insurance if the insurers could change their minds and refuse to pay after our house burns down? Would you buy auto insurance from Allstate if the “good hands” could disappear after a collision occurs?
These things do not happen because
1. Insurers are contractually obligated to keep their side of the bargain and courts enforce these obligations just like any other contract;
2. Regulatory agencies enforce good behavior, quite apart from any lawsuit, and;
3. An insurer that routinely refused to pay claims would lose customers and go out of business.
So what’s the fuss all about?
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