[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
TERMINATIONS OF HEALTH POLICIES BY INSURANCE COMPANIES: STATE
PERSPECTIVES AND LEGISLATIVE SOLUTIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JULY 27, 2009
__________
Serial No. 111-58
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
_____
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE BRALEY, Iowa
PETER WELCH, Vermont
(ii)
Subcommittee on Oversight and Investigations
BART STUPAK, Michigan, Chairman
BRUCE L. BRALEY, Iowa GREG WALDEN, Oregon
Vice Chairman Ranking Member
EDWARD J. MARKEY, Massachusetts ED WHITFIELD, Kentucky
DIANA DeGETTE, Colorado MIKE FERGUSON, New Jersey
MIKE DOYLE, Pennsylvania TIM MURPHY, Pennsylvania
JAN SCHAKOWSKY, Illinois MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas
DONNA M. CHRISTENSEN, Virgin
Islands
PETER WELCH, Vermont
GENE GREEN, Texas
BETTY SUTTON, Ohio
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
----------
Page
Hon. Bart Stupak, a Representative in Congress from the State of
Michigan, opening statement.................................... 1
Hon. Baron P. Hill, a Representative in Congress from the State
of Indiana, opening statement.................................. 4
Hon. John A. Yarmuth, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 5
Witnesses
Peggy Raddatz, Relative of Policyholder, La Grange, Illinois..... 7
Prepared statement........................................... 9
Patricia Reilling, Policyholder, Louisville, Kentucky............ 11
Prepared statement........................................... 16
Robin Beaton, Policyholder, Waxahachie, Texas.................... 20
Prepared statement........................................... 23
Richard Collins, Chief Executive Officer, Golden Rule Insurance
Company, Unitedhealth Group.................................... 39
Prepared statement........................................... 41
Brian A. Sassi, President And Chief Executive Officer, Consumer
Business, Wellpoint, Inc....................................... 44
Prepared statement........................................... 47
Carol Cutter, Commissioner, Indiana Department of Insurance...... 53
Prepared statement........................................... 55
Eleanor Kinney, Co-Director, William S. and Christine S. Hall
Center for Law and Health, Indiana University School of Law.... 58
Prepared statement........................................... 60
Submitted Material
Document binder.................................................. 85
TERMINATIONS OF HEALTH POLICIES BY INSURANCE COMPANIES: STATE
PERSPECTIVES AND LEGISLATIVE SOLUTIONS
----------
MONDAY, JULY 27, 2009
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:00 a.m., in
the Hoosier Room, University Center North Building at Indiana
University Southeast Campus, 4201 Grant Line Road, New Albany,
Indiana, the Hon. Bart Stupak [chairman of the subcommittee]
presiding.
Member present: Representative Stupak.
Also present: Representatives Hill and Yarmuth.
Staff present: Michael Gordon, Chief Investigative Counsel;
Ali Golden, Investigator; Paul Jung, Public Health
Investigator; and Sean Hayes, Minority Oversight Counsel.
OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Stupak. This meeting will come to order.
Today we have a hearing entitled ``Terminations of Health
Policies by Insurance Companies: State Perspectives and
Legislative Solutions.''
Before we begin the hearing, I would like to thank
Congressman Hill, a member of the full Energy and Commerce
Committee, for housing us today here in Indiana. In addition, I
want to welcome Congressman Yarmuth across the river in
Kentucky.
It is our general practice at subcommittee hearings that
non-members of the subcommittee do not make opening statements
or question witnesses. I believe it is appropriate that we
deviate from this practice today. I ask unanimous consent that
Congressmen Hill and Yarmuth be permitted to make opening
statement, if they choose, and to question witnesses during
today's hearing. Hearing no objection, that will be the order.
The chair will now be recognized for a five-minute opening
statement. Other members of the subcommittee will be recognized
for a three-minute opening statement. I will begin.
This hearing of the Subcommittee on Oversight and
Investigations has commenced here in Indiana at the request of
our friend Congressman Baron Hill. We are pleased to be here
for this hearing on abuses in the health insurance industry. I
would like to thank Congressman Hill and his staff for
requesting this hearing and housing us here today.
Congressman Hill has been a leader on health care, and I
can tell you from firsthand experience that he has been working
diligently in Congress and on our Energy and Commerce Committee
to look out for the people of Indiana. Thank you for having us
here today, Baron.
I would also like to welcome our friend Congressman John
Yarmuth, who is from across the river in Kentucky. Congressman
Yarmuth has been a key player in many issues in his position on
the Ways and Means Committee, and we are delighted that he is
here with us today.
Let me also thank Indiana University for hosting us today.
It is critical that Congress understand the concerns of local
communities as we develop national health care policies, and we
do that precisely through field hearings like the one we have
here today, where we can go out and hear directly from people
on matters of urgent concern.
Today's hearing is about a horrendous practice that some
insurance companies engage in called ``rescission.'' Here is
how it works. When you apply for health insurance, you fill out
an application. The forms ask about all of your preexisting
conditions and health history, and sometimes they are extremely
complicated. These insurance companies typically require access
to all of your health records as well.
The problem is that these insurance companies do not review
these applications very carefully when you submit them. They
wait. They let you pay your premiums, they let you go along and
keep paying for years, creating a false sense of security that
you will be covered if something terrible ever happens.
When something does happen, however, when you develop a
deadly disease, when you need expensive medical care, or when
you have to go to a hospital for critical treatment, these
insurance companies don't honor their agreements. Instead, they
mobilize a team of investigators to go back through your
original application.
They scour years and years of your medical records to find
some technicality, some error or omission, some box that wasn't
checked when it should have been. And when they find it, they
cancel your health insurance. They refuse to pay. And there you
are in the hospital left waiting for potentially life-saving
medical care that you may never receive.
What is outrageous about this practice is that these
insurance companies cancel policies even for people who didn't
do anything wrong. The omissions on their applications relate
to conditions that their doctors may have never told them
about. They relate to conditions that insurance companies' own
agents told them not to write down. And many times they relate
to conditions that are completely unrelated to the illness or
disease they are now seeking treatment for.
Our subcommittee has been conducting a year-long
investigation into this abusive practice. We have reviewed more
than 116,000 pages. We have reviewed more than 116,000 pages of
documents from three of the largest health insurance
companies--Assurant, United Health Group, and WellPoint. And we
learned that these three companies retroactively terminated
nearly 20,000 policies over the past five years based on
omissions on applications that were identified only after
people became ill. These rescissions resulted in savings to the
companies of more than $300 million.
Last month we held a hearing in Washington, D.C. with these
three companies, and I asked their CEOs to stop canceling
health insurance for innocent policyholders. Amazingly, they
refused. Let me show you a clip from that hearing. It will take
a minute to put up there.
[Video presentation begins.]
Mr. Stupak. Let me ask each of our CEOs this question,
starting with you, Mr. Hamm. Would you commit today that your
company will never rescind another policy unless there was
intentional fraudulent misrepresentation in the application?
Mr. Hamm. I would not commit to that.
Mr. Stupak. How about you, Mr. Collins? Would you commit
not to rescind any policy unless there is intentional
fraudulent misrepresentation?
Mr. Collins. No, sir. We follow the State laws and
regulations, and we would not stipulate to that. That is not
consistent with each State's policies.
Mr. Stupak. How about you, Mr. Sassi? Would you commit that
your company will never rescind another policy unless there was
intentional fraudulent misrepresentation?
Mr. Sassi. No, I can't commit to that.
Mr. Stupak. Each of these three companies simply refused to
stop canceling innocent policyholders' contracts. Now, it is
one thing to cancel coverage for someone who commits insurance
fraud, but it is another thing to cancel coverage for people in
the middle of a health care crisis based on innocent mistakes
or technicalities. It is simply not fair for insurance
companies to collect record profits and award their executives
billions of dollars while they are denying innocent people the
health insurance they pay for.
Facing with this damning testimony, we concluded that the
only way to stop these insurance companies was to change the
law. So our Energy and Commerce Committee has drafted health
reform legislation that will prohibit this practice of
rescission once and for all.
Our bill will protect consumers in a couple of ways. First,
we will prohibit insurance companies from rescinding coverage
unless there is clear and convincing evidence of fraud during
the application process. Second, we guarantee that consumers
have an independent and third-party review of any rescission.
We have asked the insurance companies back today to see if
they have had a change of heart and to find out what they think
of our legislation. We have also invited Indiana's Insurance
Commissioner, Carol Cutter, to hear if the State of Indiana
supports ending this terrible practice, as well as Professor
Eleanor Kinney, the co-director of Indiana Law School's Center
for Law and Health.
I also want to extend a personal thanks to both Peggy
Raddatz and Robin Beaton, who traveled here today from Illinois
and Texas to tell us their stories about how these insurance
companies improperly rescinded their health insurance. I also
want to thank Patricia Reilling from Louisville, Kentucky for
testifying today about how her policy was recently terminated
by her insurance company.
Let me point out that Ms. Beaton's case highlights that
this is not a partisan issue. This is not a Democratic or
Republican issue. When Ms. Beaton's insurance company canceled
her health insurance, she called her local congressman, Joe
Barton, who happens to be the ranking Republican member of our
committee. To his immense credit, Congressman Barton intervened
on Ms. Beaton's behalf, and made sure the insurance committee
reinstated her coverage.
Ms. Beaton, I know you regard Mr. Barton as a hero for
coming to your rescue. I am not sure if you heard what
Congressman Barton said at our hearing in Washington about your
case, so let me show you, and here is what he said.
[Video presentation begins.]
Mr. Barton. I think I speak for every member of the
committee on both sides of the aisle that if in fact there is a
practice of going in after the fact and canceling policies on
technicalities, we have got to do whatever is possible to
prevent that. If a citizen acts in good faith, we expect the
insurance companies who take their money to act in good faith
also.
Mr. Stupak. I couldn't have said it better myself.
That is the end of my opening statement. Let me next turn
to Congressman Baron Hill. Thank you again for hosting us, and
you will be recognized for an opening statement, please.
OPENING STATEMENT OF HON. BARON P. HILL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF INDIANA
Mr. Hill. Thank you, Bart. I want to begin by thanking
Congressman Stupak for taking the time to come to the place
where God himself was born in Southern Indiana. It is good to
have you here in Hoosier State, and we are delighted that you
are carrying on these hearings. Hopefully, you will be able to
get some results, and people all across our great country will
get relief from some of the questionable practices that I have
been hearing about.
I also would like you to know that Congressman Stupak is
from Michigan, and I am going to be spending a lot of time in
your great State, Congressman Stupak, because my youngest
daughter this Wednesday travels to Ann Arbor to attend medical
school at the University of Michigan. So I am looking forward
to that as well.
I have heard Congressman Stupak talk about this issue of
post-claims underwriting or health insurance rescission, what
transpired at the hearing held on this issue in Washington,
D.C. I am very interested to hear what our witnesses have to
say today in light of that hearing, and some of the things that
they have said that they would not do as a company in response
to Congressman Stupak's questions about whether or not they
would change their ways of looking at the claims.
And I would also like to thank all of the witnesses for
taking the time to participate in this hearing. This hearing
could not be more timely. I hope it sheds light on some of the
serious ills of our current health care system.
Health care reform is certainly the topic of conversation
right now. Today, I am going to be going back to meet with the
committee chairman and the White House and other members of the
Energy and Commerce Committee who are dealing with this most
important issue, so that we can have health care for all
Americans.
So I am glad we are holding such an important hearing right
here in New Albany. This issue of health insurance rescission
is, quite honestly, shocking. I can't imagine what I would do
if this happened to someone in my family, and I think that is
how we need to approach health care reform.
Put yourself in other people's shoes. This issue is
particularly distressing, because these folks aren't trying to
trick the system. They are trying to do the right thing by
being covered. And then, to have the rug pulled out from
underneath them is not acceptable.
This is also a completely bipartisan issue, as Congressman
Stupak has already spoken about. The most vocal critic of this
practice is the Republican ranking member of the Energy and
Commerce Committee, Congressman Joe Barton.
And I want to repeat what has already been said. In fact,
Congressman Barton said this today, this morning, and also said
it during the hearing, or not Congressman Barton but
Congressman Stupak was quoting Congressman Barton. ``I think I
speak for every member of the committee on both sides of the
aisle that if in fact there is a practice of going in after the
fact and canceling policies on technicalities, we have got to
do whatever is possible to prevent that.''
So I thank everybody for coming today, and I look forward
to hearing more testimony from our witnesses. Hopefully, we
will be able to get some resolution to this very serious
problem.
Thank you.
Mr. Stupak. Thank you.
Mr. Yarmuth, your opening statement, please. And it is a
pleasure to have you here as a member of the Ways and Means
Committee. And now you are an honorary member of the Energy and
Commerce Committee.
OPENING STATEMENT OF HON. JOHN A. YARMUTH, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Yarmuth. Thank you very much, Mr. Chairman, and thank
you for extending the courtesies of the subcommittee to me.
Thank you for holding this hearing.
This hearing is important for a number of reasons. I think
the foremost reason it is critical is that as we debate
insurance reform and health care reform, we end up talking
about a lot of dollars and a lot of abstract theories and a lot
of macroeconomic implications. But at its very core, this is a
debate about human beings, and this is a debate about humans
and their families and their need and their right to have
quality health care coverage that they can afford.
So I am very appreciative of the three witnesses--Ms.
Beaton, Ms. Raddatz, and Ms. Reilling--for being willing to
come here and tell their stories, because unfortunately their
stories are not atypical. Their stories are all too common, and
we are proud to have them. It is very valuable to have a human
face put on the issues that we are discussing today.
Secondly, we will hear a lot about coverage and the
uninsured today, and what is important to note is--and I think
this hearing is important because it will point out a number of
the reasons why people end up uninsured. It is not because they
don't want to have insurance. It is because they are put in
positions where, through no fault of their own, they are cast
in a market where they cannot either afford or even buy at any
cost the insurance that they need.
And we will hear a lot of discussion about profits. I know,
for instance, that over the last--well, for seven years, from
2000 to 2007, the profits of the 10 largest insurance companies
rose over 400 percent. I don't think that the cost of health
care rose over 400 percent. I know it didn't. I know salaries
didn't rise over 400 percent. And when you connect what we
have--the subjects we will hear today, the stories we will hear
today, to both issues of profitability and to the inability of
Americans to afford insurance, it will be very clear.
And, finally, I think these hearings are important, because
as we discuss the need for a public option in health care
reform, a public option that will compete with private
insurers, as President Obama says ``to keep them honest,'' I
think it will be abundantly clear after these hearings why
keeping the insurance companies honest is a mandatory element
of what we are trying to do in Congress for the American people
right now.
So I applaud the subcommittee for holding this hearing, and
I am happy to be a part of it.
Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Yarmuth.
Let us call our first panel of witnesses forward. On our
first panel we have Ms. Robin Beaton, who is a policyholder
from Waxahachie, Texas. Ms. Beaton, if you want to come
forward. Ms. Peggy Raddatz of LaGrange, Illinois, who is a
sister of the late policyholder, Otto Raddatz. And Ms. Patricia
Reilling, who is a policyholder from Louisville, Kentucky. If
she would come forward, please.
OK. This is a congressional hearing. Our statements,
questions, and answers to our questions are recorded and will
be part of the official record of the Energy and Commerce
Committee. It is the policy of the subcommittee to take all
testimony under oath. Please be advised that you have the right
under the rules of the House to be advised by counsel during
your testimony.
Do any of you wish to be advised by counsel? You are all
shaking your head in a no manner, so I figure that is no. OK.
Then, I am going to ask you to take the oath.
[Witnesses sworn.]
Let the record reflect that the witnesses have replied in
the affirmative. You are now under oath, beginning with your
opening statement. We will have an opening statement. You may
submit a longer statement for the record, and it will be
included in the official transcript.
Ms. Beaton, do you want to start? No. Ms. Raddatz, would
you like to start?
STATEMENTS OF PEGGY RADDATZ, RELATIVE OF POLICYHOLDER,
LAGRANGE, ILLINOIS; PATRICIA REILLING, POLICYHOLDER,
LOUISVILLE, KENTUCKY; AND ROBIN BEATON, POLICYHOLDER,
WAXAHACHIE, TEXAS
STATEMENT OF PEGGY RADDATZ
Ms. Raddatz. I would be happy to, Chairman. Once again,
thank you very much for inviting me here today. My name is
Peggy Raddatz, and I am appearing here today to testify on
behalf of my brother, Otto S. Raddatz. My brother was business
owner of a restaurant that he ran with his wife Marie. He
purchased a health insurance policy from Fortis Insurance
Company in August of 2003, as so many small business owners do
in this country.
On the application he indicated he had kidney stones and
that he smoked. He also listed all physicians who treated him.
Otto's health application with Fortis was accepted, and his
coverage began in August of 2003.
A year later, my brother found himself inexplicably losing
weight. His wife, Marie Raddatz, urged him to see a doctor. In
September of 2004, my 59 year-old brother was diagnosed with
Stage 4 Non-Hodgkins-type lymphoma. The very next day he began
an intensive course of chemotherapy treatments.
Due to the very aggressive type of cancer that my brother
had, a mantel zone lymphoma, he was given six more rounds of
chemotherapy by January of 2005. This was a very difficult time
for him. Because he was going through intensive chemotherapy,
he found it difficult to work, and as a result difficult to
continue to manage his business as a restaurant owner.
Otto was referred to a specialist in stem cell
transplantation and for high-dose chemotherapy. Otto began more
chemotherapy for purposes of preparing him for a stem cell
transplant. In the midst of his chemo treatments, Otto received
a phone call and letter from Fortis Insurance Company stating
his insurance was canceled. He was devastated. I remember the
day very well.
My very strong brother who was always together, my older
brother, was just totally distraught. And he called me, his
sister, who happens to be attorney. He was rescinded all the
way back to the acceptance date of August 7, 2004, which meant
he basically had no health insurance whatsoever. This meant
none of his cancer treatments would be covered at all going all
the way back to the beginning when he first got cancer.
Most importantly, he would not be able to receive the stem
cell transplant that he needed to save his life. My brother
only had a very small window of time in which to receive a stem
cell transplant. He needed to be scheduled within the next
three to four weeks or else he wasn't going to receive it,
because there would be no point to receive it. He would simply
worsen and die.
My brother was told he was canceled during what the Fortis
Insurance Company called a ``routine review'' during which they
claimed to discover a material failure to disclose on the part
of my brother Otto. Apparently, in 2000, his doctor had--his
family doctor had done a CT scan which showed an aneurysm and
gall stones. My brother was never told of either one of these
conditions, nor was he ever treated for them and he never
reported any symptoms whatsoever for these conditions.
After months of preparation, both mentally and physically,
the stem cell transplant could not be scheduled. My brother's
hopes for being a cancer survivor were totally dashed. His
prognosis was only a matter of months without the procedure.
When I called the hospital to see if, as his sister, an
attorney, I could schedule the stem cell transplant for him, I
was callously told, ``Unless your brother brings in cash, he is
not going to get the procedure without his insurance any
longer.''
My brother, who was very, very ill, and was given only a
few months to live, was accused by the Fortis Insurance Company
of falsely stating his health insurance history, despite the
fact that he had no knowledge of ever having any gall stones or
aneurysms whatsoever.
Luckily, I am an attorney and was able to aggressively
become involved in solving this life-threatening situation for
him. I contacted the Illinois Attorney General's office and
received immediate and daily assistance from Dr. Babs Waldman,
the Medical Director of their Health Insurance Bureau.
During their investigation, they located the doctor who
ordered the CT scan. He had no recollection whatsoever of
disclosing the information to my brother about an aneurysm and
gall stones, or of ever treating him for it. After two appeals
by the Illinois Attorney General's office, Fortis Insurance
Company overturned their original decision to rescind my
brother's coverage, and he was reinstated without any lapse.
Without the help of the Illinois Attorney General's office,
this would not have been possible whatsoever. What the Fortis
Insurance Company did was unethical. To deny a dying person
necessary medical treatment, based upon medical conditions a
patient has never had any knowledge of, has never complained
about, and has never even been treated for, is cruel.
It is our family's hope that this information will benefit
other patients who are in need of life-saving medical
treatments, and who do not have knowledge or means necessary to
fight against the health insurance companies. It is, further,
our desire to expose these practices of the Fortis Insurance
Company, so that others who are so deathly ill as my brother
was do not suffer as the victims of these insurance companies.
Thank you very much.
[The prepared testimony of Peggy Raddatz follows:]
Mr. Stupak. Thank you, Ms. Raddatz.
Ms. Reilling, would you like to testify? You might want to
pull that mic up. Thank you, and thank you for coming.
STATEMENT OF PATRICIA REILLING
Ms. Reilling. Good morning, Mr. Chairman, and members of
Congress. My name is Patricia Reilling.
I opened an art gallery in 1987, and in 1990 I took out a
group health insurance plan with Anthem through the Kentucky
Retail Federation. In 1994, my policy was changed to a one-
person group, and I have had the same coverage, with slight
changes on occasion, until June 30 of this year. I received a
letter from Anthem at the beginning of June informing me that
my coverage would end on June 30, 2009, and that was the first
time I had heard anything about it.
To be honest, I hadn't even opened that letter for at least
four or five days, because I had also received the information
I get from my insurance agent every year around this time
telling me about the renewal rates for the coming year. And
this time the letter was very positive and said there were no
change in the rates, I would have the same rates, and that was
just great.
And I also received a bill for my July premium, so I had
opened those, and so I wasn't really thinking that this letter
from Anthem was going to be anything that, you know, was very
urgent.
So when I opened that, I was just--I was totally shocked,
and it didn't make much sense to me. And I called the agent,
and then we started talking about it. But if you don't mind, I
would like to back up a little bit and tell you some of the
background concerning my health and the reason that it has been
so devastating for me.
I have always been really healthy. I hadn't been in a
hospital since my son was born, which was several years ago.
And I could be in a room full of people that had the flu, I
mean there could be hundreds, and I wouldn't even get the
sniffles. And I did have a bad back. I mean, I have a bad back,
and I at one time had some tests, and I see a pain management
doctor about three or four times a year, and I am on
prescriptions meds for this. That is the only thing in these
actually almost 20 years that I have been with Anthem.
Other than that, I usually describe myself as being healthy
as a horse, which is not really flattering, but it is pretty
much true, until March of 2008 when I discovered a lump in my
breast. After visiting my primary care physician, I went for a
mammogram and ultrasound. And when the technician was finished,
she said she had to check with the radiologist to see if she
had everything she needed.
After a couple of minutes, much to my dismay she was not
the one who came back in, but it was the doctor who came in and
sat down on the table to explain that they had found lumps in
both breasts, and that he was absolutely certain that they
weren't cysts, and that I needed to go to a general surgeon
right away for biopsies.
So even before the surgeon performed the biopsies, he told
me that he was certain that it was cancer, and that he would
need to remove both breasts. He did the biopsies, but he had
difficulty locating one of the tumors, and he needed to do one
of the biopsies again, so he ordered an MRI.
Well, I very soon, to my amazement, received a letter from
Anthem that denied the MRI with the explanation that nothing--
something to this effect, that nothing in my health background
or my family history indicated that I would be likely to have
cancer. And considering the fact that I don't even know
anything about my family history, I thought that was really
astonishing.
So I ended up having to go through another biopsy, which
was really painful, because the doctor ended up having to do a
lot of hunting and digging because the point was that he
couldn't find it in the first place. So the outcome, of course,
was that I did have cancer in both breasts. So April 7, I had
the bilateral mastectomies. I made a rather long but full
recovery, and on December 2, 2008, I was admitted to Baptist
East Hospital again for reconstructive surgery, and I was there
for about five days.
And after the last drain was removed at my plastic
surgeon's office, and I am probably being a little graphic, but
a lot has happened, and if you all don't mind I don't, so it
was around January 7 that I returned to her office. And on the
14th--that was when they took the last drain out.
On the 14th, when I went back, it was very obvious that I
had a very serious abdominal infection, and she wanted to admit
me to the hospital right then. I couldn't, because I had had a
little breakfast, so the next morning at 5:00 a.m. I was at the
hospital and I was admitted for emergency abdominal surgery for
a very invasive case of MRSA staph infection, which I had
contracted during the reconstructive surgery in December.
The incision from my December surgery was reopened, and my
abdomen was flushed with antibiotic fluid, and the incision was
closed. And then, two days later I had another emergency
surgery, and, again, the same thing happened, they flushed my
abdomen out. But I was so ill and had gone in so ill that they
had to give me blood transfusions and potassium, and I was
pretty much at death's door.
And this time they actually had to remove the interior part
of my navel and sew up my belly button, which this is--I am
using really intricate medical terms here, but this is what
she--how she described it to me, because this infection had
eaten away all of the interior part of my navel. And I remained
in the hospital for seven days, and went home, had to stay with
a relative for a week because I couldn't take care of myself.
And, basically, I have not regained my strength since that
time. It has flared up in a major way about three times since
then, every time I go off the antibiotics. Now the area where
the abdominal muscles were attached during my reconstruction
surgery have all been comprised from this infection, and they
no longer support my innards, again using the most
sophisticated medical terms. And I really can't stand for more
than 15 or 20 minutes. So the infectious disease doctor feels
that the infection is deeply embedded in the scar tissue and is
going to require surgery in order to clear that up.
So because of the MRSA staph infection, I have never been
able to complete my surgeries for my cancer. And now even the
surgery that I had has been compromised, and that is going to
have to be redone. And, obviously, with no insurance, that is
impossible. So I can't even get rid of this infection, because
I don't have any coverage.
I was told that recovery from this reconstructive surgery
should be about six weeks. I have been totally out of
commission for eight months, have not been able to work, and I
work for myself. That, combined with the recovery time for the
mastectomies, that has actually--it has been really
devastating.
The MRSA was difficult enough to deal with, but when I
received notification that my insurance had been canceled with
barely a month's notice, the world came crashing down. My
medications alone--and this is generic medications--are close
to $2,000 a month.
So they said--I had an appointment--just to give you an
example, I had an appointment with an infectious disease doctor
to see her again, and when I went to see her at her office they
told me that it would cost me $280, because I didn't have
insurance. So they made an appointment with her for me at the
clinic, because she is with U of L.
And my appointment was at 9:00. I didn't see her until well
after 11:00. I didn't get out of there until after 12:00, and
it was not at all the same as when I saw her in her private
office.
The reason I mention it is because I have always been a
very compassionate person, and I have always tried to put
myself in someone else's shoes. But I have certainly been
getting an in-depth education in the difference between the
haves and the have-nots. This has all been a really eye-opening
experience.
You can imagine it is not easy to stand up in front of the
world and tell some of the most intimate details of your life,
but never in my wildest dreams did I imagine that I would find
myself in this situation. I started out with a successful
career as a copywriter, I ran a manufacturing company in New
York, and then I opened my art gallery, and all it took was for
me to get sick to have everything come crashing down.
If I hadn't gotten the staph infection, things would have
been a little tight for a while, but life would have gone on.
As it is now, I have gone from driving a Mercedes and traveling
around the world and going to New York to get my hair done to
spending every waking moment calling agency after agency trying
to get assistance from pharmaceutical companies to get my
prescriptions, trying to find out who can help me pay my
utility bills, and who knew that even food stamps are on
plastic these days. I used to sell my clothes in consignment
stores; now that is where I buy them.
I guess one of the points I would like to make is that it
can happen to almost anybody. If you get sick and you lose your
insurance, you can be in serious trouble in an amazingly short
period of time.
I have had this same policy with Anthem for nearly 20
years. After having that policy, 15 years of which was
considered--I was considered a one-person group, and I never
missed a payment--I really can't understand how I could receive
a letter that gave me less than 30 days after they canceled me.
So I called my agent who told me that Anthem was no longer
going to allow one-person groups, which I thought was a little
odd since I have been a one-person group for almost 15 years.
So I started calling around. I also thought since I was in the
middle of cancer treatment, and this MRSA, I couldn't
understand how I could be dropped.
So I called the insurance company, and I finally reached
someone who wouldn't give me an answer, never said anything
about their policy of canceling one-person groups, but they
said that they had sent me a letter in April and that they had
sent me a letter in May, and they told me that I would have
been given an opportunity to at least dispute this, but they
had not heard anything from me. Consequently, I was canceled.
Well, I never got the letter. So I called my agent, and she
said, ``Oh, yes, I knew about that. But I knew that you
wouldn't be able to afford the policy,'' the conversion policy,
which was more than double what I was paying. ``So I didn't
call you. I didn't let you know about it.''
Maybe I wouldn't have been able to afford that. I wouldn't
have. But I would have at least had time to try to look for an
option. I would have had time to try to get in touch with
pharmaceutical companies to get the drugs. And she did forward
the letters to me, and they never did send them to me. Those
letters were addressed to the agent. They were never addressed
to me. They said, ``Dear Customer,'' but the addresses on the
letters were both the insurance agent.
And, actually, the information in the letters, that never
said anything about canceling one-person groups either. Nowhere
in any of these conversations did it say anything about that.
So it didn't--it just--she had taken good care of me for almost
20 years, but I don't know what happened through all of this.
But the fact that the results of an error like this being so
monumentally disastrous and without recourse can obviously be
acceptable to the insurance companies seems not only
unbelievable but, quite honestly, inexcusable to me.
In my appeal to the insurance company, all I asked was that
they continue my coverage until my treatment could be
concluded, and their answer said something about--oh, and this
came from the president of the company, the president of
Anthem. She said that she hoped that my health would improve
and that I would regain my previous lifestyle, and she said
that there was nothing they could do about their policies.
How they expected me to return to my good health and
lifestyle I don't know, but maybe I should have asked to speak
to the psychic who knew that my family's health background had
predetermined that I wouldn't have cancer. I don't know.
But I just wanted to thank President Obama and all of our
Congressmen and their hard-working staff members for their time
and efforts to make changes in our system, so that this type of
thing will become a bad memory.
Just to add a light note. When I was typing this up the
night before last, I got a phone call. And I looked at my
caller ID and it said Anthem Blue Cross/Blue Shield. Now this
is 26 days after I have been dumped by the company. And it is--
for a minute this Pollyana that lives inside me is thinking,
``Oh my gosh, they are calling me and they are going to
reinstate me.''
Then, the realist in me says, ``You are an idiot. That
isn't possible.'' And this lovely recording of this woman's
voice comes on and says, ``Have you had a mammogram lately?''
And I am thinking this is really adding insult to injury. And
it goes on and asks about other tests and how it is very
important for me to do these preventatively and everything. And
I thought, if only you were a real person and I could say, ``I
would love to have these other tests, but I don't have
insurance.''
So thank you very much.
[The prepared testimony of Patricia Reilling follows:]
Mr. Stupak. Thank you for your testimony.
Ms. Beaton, your testimony, please.
STATEMENT OF ROBIN BEATON
Ms. Beaton. Mr. Chairman, members of the committee----
Mr. Stupak. Can you just pull that mic up? It is hard to
hear you. I know you have a soft voice.
Ms. Beaton. Is that good?
Mr. Stupak. That is better. Thank you.
Ms. Beaton. Mr. Chairman, members of the committee, I am
very honored to be here today to share my story. My name is
Robin Beaton. I was registered nurse for 30 years. I had group
insurance and was in very good health. I retired from nursing
and opened a small antique business. My father always taught
our family how very important insurance was. So at my 87 year-
old Dad's insistence, I obtained an individual health policy
with Blue Cross and Blue Shield in December 2007.
In May of 2008, I went to a dermatologist for pimples. A
word was written on my chart, which was interpreted incorrectly
as meaning precancerous. In June 2008, I was diagnosed with
invasive HER-2 genetic breast cancer. This is a very aggressive
form of breast cancer. In the beginning, I was told I needed
immediate surgery. The doctor said my tumor was two
centimeters. Two centimeters is like probably that big. The
doctor said that he would perform a lumpectomy. When you don't
have a large tumor, you get to have a lumpectomy. In the
beginning, I was going to have a lumpectomy.
Blue Cross and Blue Shield precertified me for the surgery
and for the hospital stay. The Friday before the Monday I was
to have my surgery, Blue Cross and Blue Shield called me on the
telephone and they told me that my chart was red-flagged. What
does ``red-flagged'' mean? That means that they are going to
investigate you. They were doing it due to the dermatologist's
report, due to the pimple report.
My dermatologist called Blue Cross directly to report that
this was only pimples, it was nothing related to cancer. He
asked Blue Cross and Blue Shield to please not hold up my
cancer surgery. Blue Cross and Blue Shield the next day stated
that they were launching a five-year medical investigation into
my medical history. This would take approximately two to three
months.
I was frantic. I was totally alone as my family lives in
Jacksonville, Florida. The hospital wanted a $30,000 deposit,
and I knew I could not pay for surgery myself. I had no idea
what to do. I had no idea where to turn or exactly what to do
to get surgery. I met a lady who told me, she said, ``You need
to call your congressman, Joe Barton, for help.''
I called Joe Barton's office and told him of my situation.
Joe Barton's office went to work immediately to help me. The
next day I received a letter from Blue Cross and Blue Shield
permanently canceling my insurance, stating that my insurance
was canceled back to the date that it began.
Can you imagine having to walk around for months with
cancer growing inside your body and having no insurance? Joe
Barton and Christy Townsend worked non-stop every day calling
Blue Cross and Blue Shield trying to get my insurance
reinstated, so that I could have my cancer surgery. They had no
success at this point.
I began going everywhere looking for help--county
hospitals, agencies, foundations, anywhere that I could go
where people would listen to me tell my story and see if I
could get help. I was placed on a waiting list. When you have
aggressive invasive breast cancer, you don't have time for
waiting. My medical records were lost three times at the county
hospital. The process was unending, searching for help.
The sad thing is Blue Cross and Blue Shield took my high
premiums, and the very, very first time that I ever filed a
claim with them, the very first time, and was suspected of
having cancer, they took action against me, searching high and
low for a reason to cancel my policy, so they would not have to
pay for my cancer.
A nurse who attends my church, her main job is eight hours
a day she reads medical charts, and what she does is she looks
for reasons for Blue Cross and Blue Shield to cancel insurance.
When she heard about my story, what they had done to me, she
came to me and she said, ``I am so sorry this happened to
you.'' She said, ``I am just so sorry.''
Blue Cross and Blue Shield has control over life and over
death. People have to be able to count on what they pay for.
Blue Cross and Blue Shield will do anything to get out of
paying for cancer--anything. The sad fact is anyone with a
catastrophic illness not part of a group stands a much higher
chance of being canceled and left out in the cold without
insurance.
I go to a cancer support group every week, and have since I
very first found out I had cancer. Four of the girls in my
group had their insurance canceled. Two of them have had to
declare bankruptcy. It is very difficult to speak out, because
I live in fear every day that my insurance will be canceled
again.
I looked everywhere for help, and no one-no one--would help
me. No help was found until Joe Barton and Christy Townsend,
after working a very, very long time, got my insurance
reinstated. After being diagnosed in June 2008 with aggressive
invasive breast cancer, I was placed back on the surgeon's
waiting list to get my cancer surgery. My tumor grew from two
to seven centimeters. Instead of having a small lumpectomy, I
had to have a radical double mastectomy, and I had to have all
of my lymph nodes taken out, every one of them.
Delaying cancer treatment only worsens the condition,
costing more to treat, treatment much more intensive, and
treatment not being as effective. Also, the outcome is not as
good. Once you have cancer, you always have cancer. It is a
neverending battle.
I go to chemotherapy every three weeks, and I will do this
for the next year. Last week I had my second surgery, a two and
a half hour surgery, which was very hard, to be cut on again. I
had that just last week.
Cancer is expensive, and no one wants to pay for it. This
is America. People who purchase individual policies and pay
their premiums on time, they deserve to receive what they have
paid for. I pray with all my heart that no one has go through
the sheer agony that I have endured for this last year. I did
not deserve to have my insurance canceled. Blue Cross set out
to get rid of me. They searched high and they searched low
until they found enough to cancel me.
I owe my life to Joe Barton and his staff. I gave up. I
completely gave up. But they never gave up. They never gave up
on helping me. Only because of them was I able to get help.
That was the only reason I got help. If it wasn't for them, I
would be dead today.
I pray that you will listen to my story and help people
like me who are powerless against big insurance companies.
And I thank you so much for what you all are doing. I just
admire you all so much, and I thank you for listening to me.
Thank you.
[The prepared testimony of Robin Beaton follows:]
Mr. Stupak. Thank you, Ms. Beaton.
We are going to go to questions for this panel. Let me
begin.
Ms. Beaton, when your insurance policy was rescinded, you
needed a mastectomy to save your life, is that correct?
Ms. Beaton. I needed first a lumpectomy in the very
beginning. I forgot to say that. When I went to Washington,
truly honestly I was only going to have to have a lumpectomy,
which is where they go in and remove the small tumor. But due
to the waiting, I had to go from a lumpectomy to a double
radical mastectomy and the lymph nodes. So that is how much my
cancer spread.
Mr. Stupak. So in that delay, you were going for a
lumpectomy, you ended up having a double mastectomy.
Ms. Beaton. Yes. Everything.
Mr. Stupak. What would have happened if Congressman Barton
was not able to get your insurance reinstated? What would you
have done? Would you have had the surgery?
Ms. Beaton. I went to the county hospital, and they placed
me on their waiting list to get a mastectomy, to get a
lumpectomy at first and then it turned into a mastectomy. But
anyway, at the county hospital you have to wait. And to be
honest with you, they lost my records three times, and they
never called me back. In other words, I kept calling, and I
kept calling.
Mr. Stupak. So you don't know how long you would have had
to wait for the county hospital----
Ms. Beaton. I had to wait--I probably would have waited a
long time, a lot longer, to get my--I probably wouldn't have
lived.
Mr. Stupak. You also stated in your opening statement four
of the women in your cancer support group had their insurance
canceled because of cancer. Two of the four had to declare
bankruptcy.
Ms. Beaton. Yes.
Mr. Stupak. Without using any names here, can you tell us
any details about their specific interactions with their
insurance companies?
Ms. Beaton. Yes. Both of them had individual policies, and
both of them had paid their premiums. One girl had her
insurance for almost six years, and the other girl had her
insurance for three years. And just the moment that she put in
the first claim for cancer, they started doing an
investigation. It was almost like repeating my story over.
And they did an investigation into her history, and they
found a little tiny thing she forgot to write down on her
application. And they rescinded her insurance, canceled her,
you know. She had to go apply for the Safe Health--both of them
were on Safe Health.
So that is the sad thing--when private insurance gets rid
of people, eventually they will get help, but the taxpayer is
going to have to pay for it. And that is exactly what happened.
Both of them were on disability and on I guess you would call
it Medicaid or Medicare. And I have to listen to--every week I
hear them talking about the terrible time they are having, and
they have both lost their house, they have lost their home.
Mr. Stupak. To be on Medicaid, if you are under 65, as all
of us know up here because we deal with it all the time, you
either have to spend down and have very little assets or you
have to be at least disabled for two years before you can even
qualify for Medicare. If you had to wait two years and become
disabled in order to qualify for Medicare to pay for your
surgery, you probably wouldn't be here today.
Ms. Beaton. No. One of the girls has brain cancer, and the
other has breast cancer, which spread to her lungs. So, you
know, if I went around the room and told you all the people in
my cancer group and the stories, those are just the four most
significant ones. But every one of them has had trouble with
their insurance companies, getting them to pay for stuff, not
wanting to pay for scans, and just the cost of cancer is just
overwhelming.
Mr. Stupak. Well, you were a nurse, Ms. Raddatz is an
attorney, Ms. Reilling is a professional person, who is
obviously quite successful. We have a rather sophisticated
panel here, and it seems like each of you had to intervene in a
certain way to--probably more acuity or more knowledge on how
the system works in order to get your insurance or get some
form of coverage.
Ms. Raddatz, if you may, that binder right in front of you,
the brown one, Tab Number 5, I want to ask you a question about
your brother. Tab 5 is a letter your brother sent to the
Illinois Attorney General after his health insurance was
rescinded, and this was right before he was supposed to have
the bone marrow transplant, correct?
Ms. Raddatz. That is correct. It was a stem cell
transplant, yes.
Mr. Stupak. In there he writes, ``I have been through
chemotherapy, and I am being prepared for a stem cell
transplant within three or four weeks. This is an urgent
matter. Please help me so I can have my transplant as
scheduled. Any delay could threaten my life.''
So in your brother's case he needed this transplant to save
his life, is that correct?
Ms. Raddatz. That is correct.
Mr. Stupak. And if the rescission stood, in other words if
his policy was not reinstated, would he have been able to get
that transplant?
Ms. Raddatz. No.
Mr. Stupak. So the insurance company's decision was
literally a matter of life and death for him?
Ms. Raddatz. It absolutely was, because there was a very
small window of opportunity for him to have it. And he couldn't
just go shopping for another method of having it. At the last
hearing, someone brought that up. ``Well, how come you didn't
try to get some alternative means of treatment?'' Well, this is
a stem cell transplant. There are only certain doctors that do
this, and, first of all, you prepare for this for months with a
very specific protocol. It is a very sophisticated procedure.
It is a life-saving procedure; thank goodness that it exists
and that it is saving people's lives.
But you have to do it within that window of opportunity. If
you don't do it, he would have died.
Mr. Stupak. So, then, you intervened with the Attorney
General, and the Attorney General wrote a couple of letters.
And finally, after the second or third letter, they reinstated
his policy, because he was denied for something he had no
knowledge of, correct?
Ms. Raddatz. That is absolutely correct.
Mr. Stupak. OK. And your brother, unfortunately, died. But
did the stem cell transplant extend his life?
Ms. Raddatz. It certainly did. If he didn't receive the
stem cell transplant, after, like I said, he was told he
wasn't--I mean, imagine you are told that you are dying, that
you only have a few months to live, but there is a doctor who
can give you a stem cell transplant and help you, and he is
preparing you for it.
And so you are somewhat hopeful that your life will be
extended, and now all of a sudden, no insurance, no stem cell
transplant. Yes, he had the stem cell transplant eventually,
and it extended his life approximately three and a half years,
which, you know, he did pass away just 12 hours short of his
64th birthday on January 6 of this year.
But those three and a half years, to myself and our family,
were precious. We spent the last 30 days with him in the
hospital every day, and those last 30 days, for anyone who has
ever been in that situation, every month--every year, every
month, every day, every hour is precious, for your loved one
and for your family. And it was successful. And as a matter of
fact, he was preparing to have a second stem cell transplant
when he did pass away.
Mr. Stupak. Thank you.
Ms. Reilling, you were with Anthem insurance for 20 years?
Ms. Reilling. Yes.
Mr. Stupak. And Anthem is really--is our ballpoint
insurance company?
Ms. Reilling. Yes. I think they were fairly recent with----
Mr. Stupak. And of those approximately 20 years, 15 you
were in this single-person group policy?
Ms. Reilling. Yes.
Mr. Stupak. Did they ever tell you this single-person group
policy was coming to an end, they were changing their policies
on single-person group policies?
Ms. Reilling. No. As I said, supposedly, these letters that
were supposedly sent to me in April and May, but when I did see
those, which were sent to me in June after the fact from my
agent, they never said anything about them either.
Mr. Stupak. Well, were those letters addressed to your
agent or to you?
Ms. Reilling. To the agent. They referred to me, but they
were never sent to me. And they did not say anything about that
either.
Mr. Stupak. So you weren't rescinded. They failed to renew
your policy.
Ms. Reilling. Oh, no, they canceled me.
Mr. Stupak. Right.
Ms. Reilling. They said, ``You will be canceled as of June
30.''
Mr. Stupak. And then, they offered you a single, individual
policy, correct?
Ms. Reilling. Well, yes, because we applied for another
policy that was--my agent applied for something that would have
been a reasonable policy, knowing that they were--she knew that
they would not allow me to have that, because I was going to
try to get a State policy, which is like a high-risk pool.
Mr. Stupak. Sure.
Ms. Reilling. So they--but they didn't allow--they did deny
me that.
Mr. Stupak. So that you----
Ms. Reilling. But they didn't tell me why.
Mr. Stupak. Did you submit an application for an individual
policy?
Ms. Reilling. Yes.
Mr. Stupak. And you were denied?
Ms. Reilling. They said, ``We would love to give you
insurance. We are pleased to give you insurance. However, we
will not give you the insurance that you applied for, the
policy that you applied for. However, we would be glad to give
you this other policy,'' which is close to $1,300--well, one
that was close to $1,200 a month and one that was close to
$1,300 a month, which is--with a $2,500 deductible, which is
totally out of my reach.
And the reasons that they gave for denying me the policy
that I applied for make no sense whatsoever, and they actually
didn't tell me.
Mr. Stupak. Do you believe they failed to renew your policy
because they are closing this single-person group policy status
they had, or do you believe it is because you were sick?
Ms. Reilling. That makes no sense. I had it for almost 15
years. The only thing that--to me, I almost never made any
claims. I mean, the only thing was is I had this ongoing
treatment for my back that, as I said, I only went to the
doctor every three to four months, and that was because I had
to do that to get my medications renewed. And other than that,
I haven't been sick for as long as I can remember.
Mr. Stupak. So you didn't cost them any money until the
last year.
Ms. Reilling. No. And I totaled it up, and I know that I
have spent well over $200,000 on my premiums. And even with my
surgeries, they are still way ahead.
And I did want to mention something that had to do with
what Ms. Beaton said. When she was talking about the fact that
if--if the insurance companies would approve some of these
things that are asked for, it would save them money. There was
a test that my oncologist had me go for, and it actually
allowed them--the results of that test allowed me to not have
chemotherapy, which was a wonderful, wonderful thing for me. It
is a new test. It is a relatively new test. It is expensive. It
is $2,000-something.
However, it saved the company, because had I not had that
test, I was definitely going to have to have chemotherapy and
possibly radiation. They would not--no, it was close to $3,000.
The insurance company denied payment for it, and we are still
fighting it, and this goes back to 2008. They are still denying
it. They paid something like $750, and they will not pay any
more, and we have had, you know, time after time we are trying
to----
Mr. Stupak. Sure.
Ms. Reilling [continuing]. Go through that. So when you
talked about the cost effectiveness, somebody is not paying
attention, because, yes, that is an expensive test, but it is
preventing much more expensive treatment. So it doesn't make
any sense.
And the other thing is is the infection that I have now,
that is--I can't see my son, because he is diabetic, and he has
an insulin pump, which has a needle going into his stomach. So
this staph infection is threatening to him, so I can't be
around my son. I have a grandson, who is so afraid of the swine
flu, that now when he hears about this I can't see him.
And I can't go on with my life, because I can't treat this
infection. So it is just--it is crazy that you can't go on with
your life if you do not have your insurance. And I am being--
you know, I never--I didn't do anything wrong.
Mr. Stupak. Sure. So it is not just a financial, but as we
have seen from each of you, the emotional toll it takes on
families is tremendous. And each of you brought forth a form of
cancer that your brother had or you had personally.
And in documents obtained by the committee--I said we have
looked at over 116,000 documents, and it shows that cancer is
one of the conditions that automatically triggers an
investigation by these insurance companies, whether it is
Assurant or WellPoint or any of these. In fact, here is a list
of Assurant's. There is about 1,400 different codes they use.
So once you apply for it, it then triggers it in their
computers. Then, they go through and scour and try to find some
reason to deny you, because of an expense. And you have 1,400
by one company, 2,000 codes by another, so that----
Ms. Reilling. The wording of----
Mr. Stupak [continuing]. Pretty much means you have----
Ms. Reilling. The wording of why they denied me this new
policy that I tried to apply for, they said ``ongoing treatment
for'' and then----
Mr. Stupak. They list it.
Ms. Reilling [continuing]. They used--well, no, they
wouldn't say what it was. They mentioned my back, but of course
they have been treating me for that for over 20 years. Then,
they said--I don't remember the word, it is in papers that I
gave you all, but conditions, something like ``unnamed
conditions.''
Well, the only other condition is the MRSA staph, which I
got when I was in the hospital----
Mr. Stupak. Right.
Ms. Reilling [continuing]. And cancer. It seems that it is
not right for them to deny me that. And the MRSA, the thing
that is frightening to me, is this has already been eating away
at my insides. I mean, they have done emergency surgeries for
that. You know, so the longer I go not being able to have a
surgery that is supposed to help get rid of that, the longer I
am at risk of it going ahead and just munching its way through
to my insides. And it is very frightening, not to mention the
fact that I can't do anything, and I can't work and I can't
make a living.
So, you know, with just the strike of a pen, they can
totally ruin people's lives.
Mr. Stupak. Thank you.
Mr. Hill, questions, please.
Mr. Hill. Thank you, Mr. Chairman. And, again, I want to
thank the chairman for coming to Indiana to hold these hearings
to try to get to the bottom of the problems that we are having
in health care.
I am going to have to leave around noon, which is a little
earlier than when the committee is going to have to adjourn,
because I am traveling back to Washington today, as a member of
the Energy and Commerce Committee, to carry on discussions
about what we should be doing with this bill that is before us.
One of the things that is a given is the fact that when we
pass health care--and I believe that we will, although it is
going to be a struggle to do it. The legislative process grinds
slowly. But one of the things that we will be addressing is
preexisting conditions. So when we pass health care, we will no
longer have to have meetings like we are having, committee
meetings right now, because your situation will not be relevant
anymore, because preexisting conditions will no longer be an
issue.
And that is one of the most important reasons why we need
to pass health care legislation this year. Everybody has a
story to tell. I have my own story. My youngest daughter,
Libby, has a blood disorder. She is 22 years of age, and she is
heading off to Michigan Medical School. And she very soon is
going to be on her own. She is on our policy now.
What will happen to her now that she has this preexisting
condition when she has to buy her own insurance policy? We are
all very nervous about it. And so unless we get a company or
somebody that accepts preexisting conditions, she is going to
be out of luck. And so we all--the three of us here, and the
members of Congress, realize the importance of passing
legislation that is going to correct this inequity.
Now, having said that, I do have a few questions. Ms.
Beaton, you say that you obtained an individual policy with
Blue Cross and Blue Shield in December of 2007. And then, in
May 2008, which is approximately five months later, you were
diagnosed with acne, which was precancerous.
Ms. Beaton. But it wasn't precancerous. It was just a
misinterpretation of a word. But what it did to them is it red-
flagged my chart. In other words, it brought suspicion on me,
because the word. The doctor--he was the nicest man. He called
Blue Cross and Blue Shield directly, and he begged them, he
said, ``Please,'' he said, ``this is a misunderstanding.'' He
said, ``This lady came to see me for pimples or acne.'' He
said, ``She doesn't have anything related to cancer.''
Mr. Hill. And who said that?
Ms. Beaton. Dr. Kent Afergutten.
Mr. Hill. This is your dermatologist?
Ms. Beaton. Yes, sir.
Mr. Hill. OK. And then, the insurance company told you on
the Friday before you were to have cancer surgery that ``They
were launching a five-year medical investigation into my
medical history, and this would take approximately three
months.''
Ms. Beaton. Yes.
Mr. Hill. Did that delay your surgery?
Ms. Beaton. Absolutely. It delayed it from June until
October 2, because what I had to do is I had to provide them
every doctor, every hospital, every pharmacy, anything I had
that was related to my medical history for the last five years.
And can you imagine having to go back in your medical history
for five years? You know, you don't remember things. Because
they said if I forgot one thing, if there was one thing that I
forgot, that I didn't disclose, that I would automatically be
canceled.
So I searched, and, I mean, I went through all of my
records. It took me like weeks to do that. And I gave them
every pharmacy I had ever been to, because I don't use always
the same pharmacy, I go to different pharmacies. I had to give
them every pharmacy, every doctor, every hospital, every
emergency room I had ever been to. And then, what they do is
they write--they have to get permission from you to get it.
They get your medical records, and they go through with a fine-
tooth comb those medical records.
So, yes, it took from June when I was supposed to have my
surgery, June, July, August, September, October 2 I had my
surgery. And just like I said, the most significant thing is,
if you can look on a picture how big two centimeters is, how
small it is, to know that I was going to have to have a
lumpectomy, and then to have to have both of your breasts
removed and all of the lymph nodes, I will never be able to do
anything with this arm again, like have blood drawn, have IVs,
or anything out of this arm for the rest of my life. So, yes,
it affected me with all of my heart.
My tumor grew, it spread, and, you know, you never know,
but if they could have done my surgery really quickly, perhaps
none of that would have happened.
Mr. Hill. OK. Who made the decision to delay your surgery?
Ms. Beaton. Blue Cross and Blue Shield.
Mr. Hill. Did the hospital not want to, or the doctors not
want to, perform the surgery because it was in doubt whether or
not you had coverage or not?
Ms. Beaton. Yes. They said that I would have to pay a
$30,000 deposit, and I didn't have that kind of money, and
neither did my mother and father. So they wanted a big deposit,
and I didn't have it.
Mr. Hill. So the matter got worse, and then you had to call
upon Joe Barton to help you get it fixed and he did.
Ms. Beaton. He did. If you only knew how hard he worked
every day. He went all the way to the president of Blue Cross
and Blue Shield. He called them every day on the speakerphone
and talked to them, and every time they called he would call me
and say, ``No luck. We haven't had any luck, but we are still
trying. We are not giving up.'' They gave me a report every
day, so I wouldn't give up.
To be honest with you, I did give up. I gave up. I went to
the county hospital. I applied to Susan G. Komen Breast
Foundation. I applied at Promise House. I applied anywhere I
could to get help, and their funds are limited everywhere you
go, because there are so many people who have breast cancer
these days. So I was very limited in the help that I could
receive.
Mr. Hill. OK.
Ms. Beaton. I was on different waiting lists.
Mr. Hill. Ms. Raddatz, your brother's cancer treatment, was
it delayed at all?
Ms. Raddatz. It was not delayed, no.
Mr. Hill. OK. But you had to go through several hoops in
order to get--make sure that he was going to have coverage.
Ms. Raddatz. Oh, yes. I mean, when we got the news that it
was canceled, we were just horrified. I can't even tell you how
upsetting that was, because it was all scheduled. I mean, it
was ready to be scheduled--excuse me--but he had done all of
the protocols, he was ready to go. And so I literally was not
working at my law practice for weeks. I was at my office, but
daily I was working on solving my brother's health insurance
rescission problem. And I was--I am attorney, and I still
didn't know how to solve it straight up.
Mr. Hill. Right.
Ms. Raddatz. It took me several weeks, and many, many phone
calls to other attorneys, judges, experts, and finally we made
it to our Attorney General's office. And I understand in
Illinois we are very lucky to have the Health Services Section
in our Attorney General's office, Lisa Madigan's office. There
are many states that do not have those services available for
citizens to go to.
And even if it is available, most people, when they get
that type of news, they don't know what to do. They are sick.
Their spirits are low. A lot of them are not working. They
don't know what to do, and they don't know where to turn. And
many of these people just give up.
Mr. Hill. OK. Ms. Reilling, in reading through your
testimony and listening to your testimony, I am making the
assumption that Anthem did pay for some of your treatment.
Ms. Reilling. Yes.
Mr. Hill. And that somewhere midway through all of your
treatments they decided to cancel you.
Ms. Reilling. Yes.
Mr. Hill. And the reason that they gave for canceling you
is that the policy was not going to be offered anymore.
Ms. Reilling. Well, to my knowledge, I was not given any
reason, because I never received the letters that they
supposedly sent. So I just suddenly got a letter on around June
1 that said, ``Your policy will be ending--we will be canceling
your policy as of June 30.''
Mr. Hill. OK.
Ms. Reilling. I had no explanation.
Mr. Hill. Do you have insurance now?
Ms. Reilling. No.
Mr. Hill. None at all.
Ms. Reilling. No.
Mr. Hill. Do all three of you feel like that the insurance
companies were manipulating the reasons as to deny coverage to
you all?
Ms. Beaton. Absolutely.
Mr. Hill. Now, that is an opinion of course.
Ms. Beaton. Absolutely.
Mr. Hill. But you all three feel that way. And, Ms. Beaton,
do you have any insurance coverage now?
Ms. Beaton. I only have insurance because of one reason.
Mr. Hill. Joe Barton.
Ms. Beaton. That is the only reason.
Mr. Hill. OK. Thank you.
Ms. Beaton. They didn't want to give me back my insurance.
He told me that--I had never met Mr. Barton. I met him for the
very first time in Washington. He helped me not even knowing
who I was, just because I was a constituent in his area. And
the first time I met him I just broke down and said, ``I could
never thank you enough for helping me.'' But he went all the
way to the top and he told me, he said, ``They did not want to
reinstate you.'' He said, ``I really had to fight them.'' He
told me that.
Ms. Raddatz. May I respond?
Mr. Hill. Sure, Ms. Raddatz.
Ms. Raddatz. Yes. Not only--we also know after our last
hearing in Washington that now, knowing all of this
information, they still agree that they will continue their
practices of rescinding. So it didn't really matter that we
already--Ms. Beaton and myself told these stories, and many
other stories were told to them in person in Washington, D.C.
last month, they still admitted that they would just continue
those practices.
So, you know, until Congress stops them from doing it, they
are just going to keep going on, because they know it is legal
right now for them to do that. It is legal for them to rescind
people who are dying and take away their insurance policies
after good American citizens have paid their hard-working
dollars. In my brother's case, he was paying $900 a month for
his policy. And it is OK for them to do that.
And not only have they done it, but they came right out in
Congress and in front of the whole world on C-SPAN and said,
``We are just going to keep doing it.'' So they are basically
saying, ``Look, Congress, either stop us from doing it or we
are just going to keep doing it, because that is what we do. We
make our--that is how we make our living. We make our livings
by rescinding people and making more money.''
Mr. Stupak. That is a good point.
And as Congressman Hill indicated, he is going to have to
leave a little early here, because he has got to go back. We
are trying to do health insurance--or I should say health
coverage for all Americans through our Energy and Commerce
Committee.
Congressman Yarmuth, who is going to be going back, is
going to ask questions next. They already passed it through
Ways and Means Committee, but the Energy and Commerce Committee
is the main policy, health policy for the Congress, and we have
been working on this.
We were actually supposed to do one of these hearings last
week, as you know, Ms. Raddatz, in Chicago. We had to cancel
because of health care meetings. We thought about canceling
this one, but I couldn't do that twice to you, so we kept this
hearing going. I will stay and keep this hearing going. I know
Mr. Hill is going to go back and protect our interest, and we
have a lot of questions.
If my memory serves me correct, it is Section 162 which
would prevent rescissions without an independent third-party
review. But I think after this hearing, and after our next
panel, I think we have to go even further and put a time limit
as to when that review would take place, so many days, and a
few other things. So these hearings not only helps us, but,
unfortunately, it is a very busy time for all of us with health
care.
And, Congressman Hill, by the end of the year I think you
will see at least enactment of a national health insurance plan
to cover all Americans, where preexisting injuries would not be
a condition to eliminate people's coverage, and will do
something with this rescission.
But with that, let me turn it to Congressman Yarmuth for
questions, please.
Mr. Yarmuth. Thanks, Mr. Chairman. I am just going to ask a
couple of brief questions.
Ms. Beaton, you talked about your cancer support group and
the four women who are with you in that, and two of them have
gone bankrupt and they had had their coverage canceled. Were
the situations similar? Were these all cases of rescission as
far as you know?
Ms. Beaton. Yes, every one of them was.
Mr. Yarmuth. Were they able to--are they currently insured
at all? They are not insured?
Ms. Beaton. Not at all. They all are on state assistance,
every one of them. Every one of--the one girl lost her house,
and now she is living in government-subsidized housing. She had
a nice house, and she lost her house. She lost everything and
has to live in government housing now.
Mr. Yarmuth. Did they receive their treatment in any way,
or were they--did they rely on charitable care or something?
Ms. Beaton. They relied on charitable care, which is like
mine. They didn't get immediate care; they had to wait. And
when you go through a county hospital around Dallas, there are
so many people there, you wouldn't even believe. Every time you
go to a clinic appointment it is the whole day. You go--no
matter if you have an 8:00 appointment, you wait all day long
with a room just like this big just full of people. You can't
even imagine how long you have to wait.
And then, when you get in a room, you finally think you are
going to get to see the doctor, well, guess what, you wait
another couple of hours. So it is an all-day thing. There is no
way you can work. There is no way you can keep a regular job or
do regular things, because your whole time is going to waiting
to see a doctor. It is a very bad situation.
Mr. Yarmuth. Congressman Barton was able to keep your
coverage in force. Has there been a change in your premium
rates since then?
Ms. Beaton. Yes, they went up quite a bit. They went up.
They said it wasn't anything related to that. They said that
they were going up on everybody's policy, but they sent me a
letter, and, yes, they went up. Right away they went up.
Mr. Yarmuth. How much did they go up, do you remember?
Ms. Beaton. It was like $200 a month. And it was already a
real high premium, because of my age. I am 59.
Mr. Yarmuth. Right.
Ms. Beaton. So to me it was a lot of money. It was all I
could do. And to be honest with you, I never would have--when
Mr. Barton called and told me my insurance was reinstituted,
you know what I told him? I said, ``I don't want it. I don't
want it back.'' I said, ``I have lost my trust.''
And by that time, I had applied to a state program, and I
had gotten accepted for the state program where they pay 100
percent for women with breast and cervical cancer, and I told
him, I said, ``I don't want Blue Cross and Blue Shield back.''
I said, ``Why should I want them back? What they did to me,
what they cost me.'' But he told me, he said, ``You will never
be able to have insurance again. You will be uninsurable
because of the cancer.'' He said, ``Take it back.'' He said,
``It is your last chance in your life to get regular
insurance.''
So because of his great wisdom, I only took it back because
of him, because I lost every bit of my trust. I hated them.
Mr. Yarmuth. Ms. Reilling, we have a copy of a letter that
you received on July 1 of this year, just a few weeks ago,
offering you the alternative individual coverage, and
stipulating the reasons that you were denied coverage and
denied your application, which I assume was to resume your one-
person group insurance coverage, is that right?
Ms. Reilling. No. Actually, my agent, she just kind of
ignored that whole thing and acted like--she is the one who
told me that Anthem was discontinuing one-person groups. I
never heard it--I have never heard it from the company, so she
applied----
Mr. Yarmuth. For an individual policy.
Ms. Reilling [continuing]. For an individual policy, but
one that was close to what I was paying, and that was what they
denied.
Mr. Yarmuth. And they denied that.
Ms. Reilling. And they offered me one that was----
Mr. Yarmuth. One that was more expensive and mentioned----
Ms. Reilling. A whole lot more expensive.
Mr. Yarmuth [continuing]. The preexisting conditions and
your treatment for protected health information, it says in the
letter----
Ms. Reilling. Yes.
Mr. Yarmuth [continuing]. Under Tab 23. I understand why
they didn't want to put it in the letter, because that--it is
your personal information, even though to you it might have not
been a congressional----
Ms. Reilling. But the only----
Mr. Yarmuth [continuing]. So they want to protect you.
Ms. Reilling [continuing]. Thing it could be, though, is
the cancer and the MRSA.
Mr. Yarmuth. Right.
Ms. Reilling. Because that is the only thing I have been
treated for.
Mr. Yarmuth. Right. Do you know if this offer--the offer
that they made, whether there would be any exclusions as to
coverage?
Ms. Reilling. No, because, as I said, I didn't even----
Mr. Yarmuth. Couldn't afford it anyway.
Ms. Reilling. I didn't know about any of this, and my agent
just turned it down. And, actually, she was only applying for
it as a means to getting me to apply for Kentucky Access, which
required--it wasn't enough for me to just have been dropped by
the insurance company, I had to have applied and been denied,
which is why I have gone so long without insurance.
However, when I found out what the rates are for Kentucky
Access, I can't afford those either. It is $800 a month, and
that is a public--I mean, a State program.
Mr. Yarmuth. Right. OK. Thank you very much.
Thanks to all of you for telling your stories. They were,
again, very important in putting a face on the types of
situations that we are trying to correct and on efforts to
reform health care delivery and insurance in the country.
Appreciate it.
I yield back. Thanks, Mr. Chairman.
Mr. Stupak. Thanks, Mr. Yarmuth.
We had asked Assurant Health Insurance to come. They
refused. I do not want to use the subpoena power, even though
this committee has it. But, Ms. Raddatz, that was your
brother's health insurance, but I want to ask a question
anyway, if I could.
Your brother's individual health policy was Fortis, which
is really Assurant Health. Is that right?
Ms. Raddatz. Yes, that is correct.
Mr. Stupak. OK. I would like to play a television ad that
Assurant is running across the country right now and get your
reaction to it. Would you show us that ad, please?
[Video presentation begins.]
``Female Speaker: My employer doesn't offer medical
insurance. So we needed an affordable health plan that fit our
family's needs.
Female Speaker: When I started my own business, I didn't
think I could afford health insurance. I just wanted to be able
to see my personal doctor once a year.
Male Speaker: When I retired, we were years away from
Medicare.
Female Speaker: But we still needed protection. What if
something serious happened?
Female Speaker: So a friend recommended Assurant Health. We
were able to protect our entire family. They even have a dental
plan.
Female Speaker: I saved hundreds of dollars by only paying
for benefits I want. I even got a 50 percent discount just for
being healthy.
Male Speaker: We have got $6 million in medical coverage,
and can even see the specialist we choose.
Female Speaker: Without a referral.
Male Speaker: For over 100 years, Assurant Health has been
meeting the needs of individuals like you. Plans start under
$100 per month.
Male Speaker: Call now and speak with your local agent,
Carl Heath, Jr., for your no obligation quote. Call 1-410-288-
0772 now.''
Mr. Stupak. In this ad, it shows people who might need
insurance, as they say in the ad, ``like you,'' a family, small
business owner, retiree, and they all look relatively healthy.
But what the ad never mentions is that Assurant will not
provide insurance to people with preexisting conditions,
because these people get too expensive and it would reduce
their profits.
So let me ask you, from your experience, does this company
have an interest in keeping sick policyholders on its rolls?
Ms. Raddatz?
Ms. Raddatz. In keeping sick policyholders?
Mr. Stupak. Yes.
Ms. Raddatz. Absolutely not. All they want are healthy
people, so that they can collect insurance premiums and not
have to pay out any claims. They don't want sick people. When
you become sick, they cancel and rescind your policy. And so as
they state in the commercial, how dare they? What if something
serious happens? Something did serious happen to my brother,
and they rescinded him.
Mr. Stupak. Let me show you another clip on another
Assurant TV ad.
[Video presentation begins.]
``Male Speaker: Unlike other health insurance companies
that focus on corporations and treat everyone the same,
Assurant Health is there for the individual. So if you need
health insurance, call the number on your screen, visit our Web
site, or contact your local agent.
Male Speaker: Call now to find out''----
Mr. Stupak. They say they are not treating everyone the
same, and they are there for the individual. Were they there
for your brother Otto?
Ms. Raddatz. Absolutely not.
Mr. Stupak. Do you find these ads misleading about how
Assurant covers individuals?
Ms. Raddatz. I would say they are misleading, they are
upsetting. I would say to people, ``Run, do not buy insurance
with a company that doesn't stand behind the people that need
them.''
Mr. Stupak. And as I said, there is 1,400 reasons or
excuses why they cancel you once you become sick.
Let me ask you, Mr. Baron, Hill, do you have any further
questions?
Ms. Beaton. Can I say something real quick?
Mr. Stupak. One minute.
Mr. Hill, questions?
Mr. Hill. The only question I might have is--maybe this is
for the representatives from the insurance companies, but my
guess is that once you are denied insurance coverage, it is
almost impossible for another insurance company to pick you up.
I don't know if you have had that experience or not, Ms.
Beaton. I know you----
Ms. Beaton. They never pick you up. Never. Never.
Mr. Hill. There is just like a zero chance for you being
able to get coverage.
Ms. Beaton. Right. Have you ever been refused insurance?
They ask that on the questionnaire. It is one of the questions
they ask you. If you have ever been refused insurance or
canceled, they just kick you right out.
Mr. Hill. OK.
Ms. Beaton. All I wanted to say is I admire you so much for
getting those commercials. I wish you would have brought the
Texas Blue Skies Blue Cross/Blue Shield commercial that has
been airing every day, about 15 times a day. I want to just
puke every time I hear it. They have you humming a little tune,
you know, about America and blue skies and everything is
wonderful, ``We will always be here for you,'' and every time I
listen to that commercial on TV, how they are spending millions
of dollars for those commercials, I just say--I want to say,
``You are lying. You are liars.''
You know, they are spending all that money on Blue Skies
commercials. Sometime you can get one of those Blue Skies'
commercials for Blue Cross/Blue Shield and it will make you
sick to your stomach.
Mr. Stupak. Well, there is no doubt the--from 2000 to 2007,
according to SEC filings, the profits for insurance companies
has gone from $2.4 billion to $12.9 billion. That is a 428
percent increase during the last seven years. And we see it on
the backs of people like you, and so hopefully we do get
national health care, so we don't have to worry about that.
Let me, once again, thank this panel for your heartfelt
testimony. Thank you for traveling here at your expense to be
with us.
Ms. Beaton, have a safe trip back to Texas; Ms. Raddatz,
back to Illinois; and, Ms. Reilling, back to Kentucky. Thank
you very much for being here.
Ms. Raddatz. Thank you all for caring enough to do this.
Thank you so much.
Mr. Stupak. Thank you. We will dismiss this panel.
Ms. Reilling. Thank you.
Ms. Beaton. Thank you.
Mr. Stupak. I would now like to call our second panel of
witnesses. On our second panel we have Mr. Richard Collins, who
is the Chief Executive Officer at Golden Rule Insurance
Company, which is owned by UnitedHealth Group; Mr. Brian Sassi,
who is Chief Executive Officer for Consumer Business at
WellPoint, Incorporated; Ms. Carol Cutter, who is the
Commissioner of the Indiana Department of Insurance; Professor
Eleanor Kinney, who is a Professor of Law at Indiana University
in Indianapolis.
Thank each and every one of you for coming and for adding
to today's hearing. As I told the last panel, it is the policy
of this Committee to take all testimony under oath. Please be
advised you have the right under the rules of the House to be
advised by counsel during your testimony. If you wish to be
represented by counsel?
[Witness responses.]
Mr. Stupak. Let the record reflect each indicated they did
not wish to be represented by counsel at this time. If at any
time during your testimony you wish to consult with counsel,
you can. Counsel cannot testify, but you can consult with them
before answering a question.
Since you are all standing, please raise your right hand
and take the oath.
[Witnesses sworn.]
Mr. Stupak. Let the record reflect that the witnesses
replied in the affirmative. You are now under oath. We will now
hear your 5-minute opening statement. You may submit a longer
statement, extra documents, for inclusion in the official
hearing record.
Mr. Collins, if you don't mind, we will start with you, go
from my left to right.
Mr. Collins. Yes, sir. Thank you, sir.
Mr. Stupak. Thank you.
STATEMENTS OF RICHARD COLLINS, CHIEF EXECUTIVE OFFICER, GOLDEN
RULE INSURANCE COMPANY, UNITEDHEALTH GROUP; BRIAN A. SASSI,
PRESIDENT AND CHIEF EXECUTIVE OFFICER, CONSUMER BUSINESS,
WELLPOINT, INC.; CAROL CUTTER, COMMISSIONER, INDIANA DEPARTMENT
OF INSURANCE; AND ELEANOR KINNEY, CO-DIRECTOR, WILLIAM S. AND
CHRISTINE S. HALL CENTER FOR LAW AND HEALTH, INDIANA UNIVERSITY
SCHOOL OF LAW
STATEMENT OF RICHARD COLLINS
Mr. Collins. Chairman Stupak, Congressman Hill, Congressman
Yarmuth, and members of the Subcommittee, thank you for
inviting me today as we continue our dialogue on individual
health insurance.
My name is Richard Collins. And I am the CEO of Golden Rule
Insurance Company, a UnitedHealth Group business that provides
health insurance policies to individuals and their families.
Golden Rule is headquartered in Indianapolis and employs 750
individuals in the State of Indiana. It has been offering this
important coverage option for more than 60 years.
As part of our continuing commitment to the outstanding
workforce of the State of Indiana, we recently completed the
initial phase of a new 24,000-square foot, state-of-the-art
customer care center in Vincennes. The center currently employs
90 individuals with the capacity for 300 additional full or
part-time jobs.
Our company mission is to improve the health and well-being
of all Americans. In the individual insurance market, we
accomplish this by offering innovative and affordable products
that meet the diverse health care and financial needs of our
customers.
We also have a responsibility to treat all of our customers
fairly, and I can assure you we take this responsibility very
seriously. In our current system of health care delivery, the
individual insurance market operates primarily for families who
do not have access to group coverage or to government health
benefit plans, such as Medicare.
Unfortunately and for a variety of reasons, some
individuals choose not to purchase private health insurance
until they have a significant health event. This decision not
only has an enormous physical and financial impact on these
individuals and their families but raises the cost of health
care for everyone.
We have long advocated that this country needs
comprehensive health insurance reform that includes modernizing
the delivery system, tackling the fundamental drivers of health
care cost growth, strengthening employer-based coverage, and
providing well-targeted support for low and middle-income
families.
To be effective, we believe modernization of the individual
insurance market needs to contain all of the following
elements. First, individuals must be required to obtain and
maintain health insurance coverage so that everyone
participates in both the benefits and the costs of the system.
Second, insurers should be able to set rates within the
limited parameters of age, geography, family size, and benefit
design just as they do in the group insurance market. However,
let me emphasize this point. Rates should not vary based on
health status, and coverage should be guaranteed, regardless of
preexisting conditions for those that maintain continuous
coverage.
Third, low and middle-income families should receive some
form of subsidy to ensure that they have access to the same
care as all Americans.
Fourth, insurers should be able to offer a wide spectrum of
plan designs to allow American families the flexibility to
choose a plan that fits their budget. And, lastly, the tax
treatment for individual insurance premiums should be on par
with employer-sponsored coverage.
Until comprehensive reform is achieved, we believe that the
medical underwriting of individual insurance policies will
continue to be necessary. If these changes are instituted, most
of the reasons for individual medical underwriting of
individual health insurance as well as most of the reasons that
individual policies are rescinded or terminated would cease to
exist.
As you know, the practice of rescission has been recognized
by the laws of virtually every state. Rescission is an
unfortunate but necessary recourse in the event of a material
and at times intentional or fraudulent misstatement or omission
on an insurance application.
Our use of rescission is rare. Less than one-half of 1
percent of all of individual insurance contracts in 2008 were
terminated or rescinded. And in each case the affected customer
was afforded the right to appeal. Our practice is to rescind
coverage only in the event an applicant made a knowing material
misrepresentation or omission on the application for insurance.
In the event that we determine it is necessary to rescind
coverage after a thorough investigation of the facts and in
compliance with existing stare laws and regulations, we follow
practices and procedures designed to ensure a fair and
transparent process for the individual.
Under our current system, failure to act on these cases
would be fundamentally unfair to individuals and working
families that play by the rules, and it would further limit our
ability to provide quality and affordable health care for every
American. And affordability is by far the biggest barrier to
access.
We look forward to working with the Subcommittee and the
Congress and state and federal regulators on ways to continue
to expand access to affordable health insurance coverage in the
individual market. Thank you.
[The prepared statement of Richard Collins follows:]
Mr. Stupak. Thank you.
Mr. Sassi, your opening statement, please, sir?
STATEMENT OF BRIAN SASSI
Mr. Sassi. Thank you Chairman Stupak and members of the
Committee for inviting me to testify before you today. I am
Brian Sassi. And I am President and CEO of the Consumer
Division of WellPoint.
There seems to be a lot of confusion about why an insurance
company might rescind a policy. Some have said that insurers
rescind policies because they don't feel like paying when
someone gets sick. This is simply not true. The decision is
about controlling corporate fraud and material
misrepresentations that contribute to spiraling health care
costs.
At WellPoint, we do not rescind a policy coverage just
because someone on the policy gets sick. My company employs
over 42,000 people nationwide: 4,500 here in Indiana and 1,300
across the river in Kentucky. For anyone to suggest that I or
my fellow associates, each of us with our own personal
experiences with illness, would rescind a person's coverage
just because he or she got sick is an unfair accusation. I
hope, Mr. Chairman, that as you complete your inquiry, you will
be able to help correct this misperception.
We take contract rescissions very seriously because we
understand the impact these decisions can have on families and
individuals. We have put in place a thorough process with
multiple steps to ensure that we are as fair and as accurate as
we can be in making these difficult decisions. And to be clear,
we do not rescind policies based on a condition for which the
policyholder was unaware at the time that he or she had applied
for coverage.
I want to emphasize that rescission is about controlling
fraud and material misrepresentations that contribute to
spiraling health care costs. By some estimates, health care
fraud in the U.S. exceeds $100 billion per year, an amount
large enough to pay for covering nearly half of the 47 million
uninsured in this country.
Rescission is one tool employed by WellPoint and other
health insurers to protect the vast majority of policyholders
who provide accurate and complete information from subsidizing
the costs for those who do not. The bottom line is that
rescission is about combating costs driven by these issues.
If we fail to address fraud and material misrepresentation,
the cost of coverage would increase, making coverage less
affordable for existing and future individual policyholders. I
would like to put this issue in context.
While most people in this country who are under the age of
65 receive coverage through their employers, 15 million
Americans purchase coverage in the voluntary individual market.
In a market where individuals can choose to purchase insurance
at any time, health insurers must medically underwrite
applicants for current health risk.
If an individual buys health coverage only when he or she
needs health care services, the system cannot be sustained.
While we understand and appreciate that this is a critical
personal issue, individual market rescission impacts an
extremely small share of the individual market membership.
In our experience, we believe that more than 99 percent of
all applicants for individual coverage provide accurate and
complete information. In fact, as a percentage of new
individual market enrollment during 2008, we rescinded only
one-tenth of 1 percent of the policies that year.
Here in Indiana, the issue of rescission in health
insurance also affects an extremely small number of
individuals. In 2008, we enrolled over 66,000 new individual
market members but rescinded only 116 individuals.
Rescission is a longstanding insurance contract remedy in
America. The concerns regarding rescission surfaced in the
California media in 2006, generating the public concern which
we are discussing here today. Our main point today is the same
as it was then. A voluntary insurance market for health
insurance requires that we protect our members from costs
associated with fraud and material misrepresentations.
Otherwise the market cannot be sustained.
In response to the public concern over the practice of
rescissions, WellPoint in 2006 undertook a thorough review of
our policies and procedures. Following that review, WellPoint
was the first insurer to announce the establishment of a
variety of robust consumer protections that ensure rescissions
are handled as accurately and as appropriately as possible.
These protections include: creating an application review
committee, which includes a physician that makes rescission
decisions; two, establishing a single point of contact for
members undergoing a rescission investigation; and, three,
establishing an appeal process for applicants who disagree with
our original determination which includes a review by an
application review committee not involved in the initial
decision. And in 2008, WellPoint was the first in the industry
to offer a binding, external, independent third party review
process for rescissions. We have put all of these protections
in place with multiple steps because we cover millions of
Americans and want to be as fair and as accurate as we can be.
In response to policy-maker interest in enacting consumer
protections related to rescission, WellPoint is proposing a set
of rescission regulations with new consumer protections. I have
outlined these in my written testimony.
In addition, the health insurance industry has proposed a
set of comprehensive and interrelated reforms to the individual
health insurance market as a whole. The centerpiece of this
proposal is the elimination of medical underwriting combined
with an effective and enforceable personal coverage
requirement. This would render the practice of rescission
unnecessary.
We appreciate that the health care reform bills under
consideration in the House envision such a system. However,
unless Congress creates a strong and effective personal
coverage requirement and allows younger individuals to receive
sufficient discounts, many only buy coverage when they need
services, which will dramatically drive up the costs for
everyone.
As currently written, the health care legislation under
consideration in the House does not accomplish this. We would
welcome the opportunity to work with you to find common ground
on this issue to make certain that these insurance market
reforms achieve the object so that we can make quality,
affordable health coverage available for all Americans.
Thank you for the opportunity to discuss this issue and
these proposals with you. I look forward to your questions.
[The prepared statement of Brian Sassi follows:]
Mr. Stupak. Thank you, Mr. Sassi.
Ms. Cutter, your opening statement, please?
STATEMENT OF CAROL CUTTER
Ms. Cutter. Thank you, Mr. Chairman.
Chairman Stupak, Representative Hill, Representative
Yarmuth, thank you for the opportunity for the Indiana
Department of Insurance to make comments today in terms of
procedures we follow that are set up according to State
legislature rules and law, also through our HIPAA process that
was passed by the federal government back in 1996.
As you know, individual health policies are legal contracts
that contain certain provisions. And all insurers who write
policies in Indiana must include those particular provisions in
their form filings and are submitted to our department for
review before that contract or policy is allowed to be sold or
offered to any consumer residing in Indiana.
These provisions have been adopted over the years by our
State legislature and tend to be fairly consistent among the 50
states. The National Association of Insurance Commissioners,
which is a trade association for insurance commissioners
throughout the State, also helps state departments of insurance
develop language for statutes and regulations or models for the
language that may be used for guidance as well.
There are thirteen provisions currently in Indiana code.
They are the entire contract, time limit on certain defenses or
incontestability, grace period, reinstatement, notice of claim,
claim forms, proofs of loss, time of payment of claims, the
actual payment of claims, physical examinations and autopsy,
legal actions, change of beneficiary, and guaranteed
renewability provisions.
Of these provisions, the second one, which is that time
limit on certain defenses or incontestability, is the provision
that prohibits an insurer from denying a claim or voiding
coverage once the policy has been in effect for 2 years or more
from the date of issue, unless fraud has occurred.
Thus, an insurer is allowed to rescind coverage only within
the 2-year window following issuance of that policy for any
misstatement or preexisting condition that wasn't indicated on
the application for coverage.
HIPAA supports this very same action within the
``guaranteed renewability of individual health coverage''
wherein it states that an insurer may non-renew or discontinue
coverage due to nonpayment of premium, fraud or intentional
misrepresentation of material fact, or withdrawal of the
insurer from the marketplace, if the insured moves outside the
service network, or there is a termination of membership in the
association that offered the insurance. So in Indiana, we
follow not only the laws under the State legislature that have
been given to us but also under the federal HIPAA law.
There are no provisions in Indiana code which disallow the
rescission or specify the procedures under which that event is
to function. However, Indiana does have two alternatives that
allow insurers to offer individual policies that do contain
exclusions for specific conditions, called waivers, if the
applicant chooses to accept it. This allows people who would
normally be declined for coverage or refuse coverage the
ability to pick a policy that may have a waiver for a health
condition that that applicant does not believe would be
recurring in the future.
A second safety net that Indiana offers is the Indiana
Comprehensive Health Insurance Association, which is our State
risk pool, which does open its doors to anyone who is refused
coverage by an insurer in the State of Indiana or have a
condition that is considered uninsurable by an individual
carrier.
Our policy analysts within the department also review the
language contained in any applications that are used by
insurers to issue health policies to make certain that there
are no all-inclusive, have you ever, or other questions using
medical terminology too complex for the average consumer to
understand. No insurer may use an application without our
stamped approval of that form.
Indiana's statutes do not require insurers to report the
number of policies rescinded as part of their annual
statements. So our involvement with rescissions begins when the
insured files a complaint with our Consumer Protection Area.
We then investigate the actions surrounding the rescission
to see if there has been any inappropriate behavior on the part
of the insurer. Last year in Indiana, of the 6,000 complaints
we investigated, 14 of those complaints were for rescission of
individual health policies. Of those 14 rescissions, 2 of them
were for a medical condition for which the claim that had
occurred was not related to that particular angle mentioned.
And so alternative arrangements were made for the insurer
to provide coverage for that person, instead of actually
rescinding the coverage. Generally, the rescission complaints
we have reviewed over the last few years were most always based
upon the same medical condition for which the insured had
submitted a claim but, for some reason, had not revealed that
information on the application of coverage.
As noted in prior testimony before this Subcommittee,
insurers have established outside review procedures when a
rescission occurs, which does give the policyholder the
opportunity to question those actions and retain coverage or
receive a waiver rider for that condition. The department's
Consumer Protection Unit is specifically described and used for
a safety net for consumers who fall into these sorts of
categories.
Another concept, which Mr. Collins just referred to and I
believe the Subcommittee is considering, would be the change on
an individual health contract to a guarantee issue basis, with
an accompanying coverage, mandate for coverage, which would
eliminate the need for medical histories for applicants under
any circumstances.
We believe that the insurers currently have the legal
ability to perform medical reviews within that 2-year
contestability period to protect the other policyholders from
fraudulent claims payments or higher premiums. We are always
open to discussions for any improvements that could be made in
the rescission process itself.
Thank you for your time.
[The prepared statement of Carol Cutter follows:]
Mr. Stupak. Thank you.
And, Professor Kinney, your statement, please.
STATEMENT OF ELEANOR KINNEY
Ms. Kinney. Thank you. Thank you, Chairman Stupak, Mr.
Hill, Mr. Yarmuth. It is an honor for me to be here to testify
today. And I will try to be a little bit briefer than my
statement, which has already been submitted for the record.
I was asked by Mr. Gordon to kind of look at Indiana and
the situation generally. In Indiana, the task force at Indiana
University while the Indiana University Health Reform Faculty
Study Group did do an in-depth study of the situation in
Indiana with respect to health coverage.
I fear that the situation with requiring people to rely on
the private market is increasingly--specifically, I think there
are situations where we are losing health insurance coverage
through employment. And, in particular, we have witnessed a
fairly precipitous drop of insurer-sponsored coverage over the
years. And we find that employers compared to other states
offer less insurance.
Also, with the economic times, people are losing jobs in
Indiana, like other states. And, thus, they have to rely on the
private individual insurance market for their health insurance.
And this puts people with serious conditions or health problems
in a difficult position when it comes to getting adequate
health insurance coverage. And I think it is one reason why we
need comprehensive health reform, which I think all of us
uniformly believe is the case.
One would say, ``Well, somebody with a health problem
creating an existing condition can go to the Indiana
Comprehensive Health Insurance Association.'' And, indeed, they
can, but on page 3 of my testimony, I have put together a chart
of what that would cost for somebody in Marion County, which is
Indianapolis; and Venderburgh County, which is down in
Evansville on the coast.
I don't know about your all's financial circumstances, but
I would find that having to pay some of these premiums
prohibitively expensive. And then if you look at the
information on the plans which were available on the Web site,
you get health insurance coverage that is pretty skimpy in
terms of the co-insurance involved. In other words, there is
lots of money that would have to be paid out of pocket before
benefits chip in. So it is questionable in my judgment whether
this is really a sufficient answer to the problem of people
with serious health insurance problems.
We have also done work in the Center for Law and Health in
the past that shows that these kinds of practices with
insurance companies have occurred and people with serious
illness have experienced cancellation of insurance policies.
And I have got that research on page 4 of my testimony.
It is clear that HIPAA, which I think, in part, was
designed to address the problem of non-renewal and
cancellation, really hasn't done the job when it comes for
revision.
I think that strategies for reform, which I was also asked
to address, must address the unfair aspects of the process of
rescission and post-claims underwriting.
In review, in getting ready to come here today, I looked at
the National Association of Insurance Commissioners' principles
on health reform. And one of their principles on health reform
quoted on page 6 of my testimony is addressing adverse
selection. And I think it is very important to appreciate that
adverse selection is an important problem in the private health
insurance market. And it is not realistic for us to assume that
that is not an important problem for insurers. It will be
addressed if we have comprehensive health insurance with
individual mandate.
And, finally, I would commend the Committee, not only for
H.R. 3600 and the provisions in that bill intended to address
rescission practices and post-claim underwriting, but for the
tremendous job in laying out issues associated with this very,
very difficult condition.
I think that you have done a good job with increasing the
evidentiary standard that would be applied in making a
rescission decision as well as require external review. I am
interested to see that insurers that have testified here today
have also talked about external review.
Another provision you might want to think about that I see
has been bantered around in the NAIC model of long-term care,
health insurance regulations of long-term care, insurance
regulations, is a prohibition against post-claims underwriting.
It seems to me that if an insurance company has the chart for a
specific period of time, it might be closer than a shorter
period of 2 years, then they ought to be able to look at the
chart, see if they want to provide a policy and let the
policyholder know that they are not going to be able to be
there for them in the event of another serious illness.
Thank you. I will take your questions.
[The prepared statement of Eleanor Kinney follows:]
Mr. Stupak. Well, thank you, Professor.
And before I turn to my two colleagues, let me just ask one
quick question. Mr. Collins, on behalf of Golden Rule Insurance
Company and UnitedHealth Group, would you commit today that
your company will never rescind another policy unless there is
a potential fraud misrepresentation in the application?
Mr. Collins. We would commit that we will not rescind a
policy if there is a knowing and material misrepresentation or
omission on a health insurance policy.
Mr. Stupak. So, in other words, your answer is no?
Mr. Collins. No, sir. There is quite a bit of overlap in
those two standards between knowing and intending. The standard
that we follow is a knowing material omission, misstatement
or----
Mr. Stupak. So if I just forget to check a box, I can be
rescinded, right?
Mr. Collins. Well, our----
Mr. Stupak. That is an omission.
Mr. Collins. Well, sir, our applications are designed to
elicit relevant information needed to underwrite a policy form.
Mr. Stupak. Anyone who went through applications in
Washington could explain it, the terms.
Mr. Collins. Sir, I can explain the terms of ours. I
believe you are referring to somebody else who testified.
Mr. Stupak. So to my question of intentional fraud, unless
there is intentional fraud, you reserve the right to rescind an
application for whatever reason your policy states?
Mr. Collins. We follow state laws.
Mr. Stupak. Every state is a little different.
Mr. Collins. And we have an obligation to our policyholders
to honestly fill out the application, to fill out the
application completely. Our people made it up. We have a
condition excluded from coverage or some who are even designed
to treat them the same as people who did not fill out an
application completely or remain during this representation in
the application.
Mr. Stupak. My concern is that your definition of knowing
is you assume you know everything in your medical records for
the last 5 years. Lay people really don't.
So let me go to Mr. Sassi. Are you willing to commit that
WellPoint today that your company will never rescind another
policy unless there is intentional fraud, misrepresentation in
the application?
Mr. Sassi. Like Mr. Collins, WellPoint follows state law.
In the vast majority of states in this country----
Mr. Stupak. It is a very simple----
Mr. Sassi. No, it isn't, sir.
Mr. Stupak [continuing]. ``Yes'' or ``No'' answer.
Mr. Sassi. Well, it is not a simple question because with
the misrepresentations of the law. And so in most states, it is
a no-win standard. And if someone knowingly misrepresents their
health status and it is material to whether we could offer a
policy, then we will rescind that but only if it is material in
the interim and it is not just----
Mr. Stupak. Even if it is unintentional, just because they
knowingly missed something, you could rescind them, right?
Mr. Sassi. If it is material, then it would have not
already covered----
Mr. Stupak. Sure. If they knowingly----
Mr. Sassi. If someone has been unaware of their medical
condition----
Mr. Stupak. Sure.
Mr. Sassi [continuing]. Then we would not rescind.
Mr. Stupak. You have 1,400 codes to trip up people, right?
These are your codes. Don't you have 1,400 codes which trigger
a review of an application post-underwriting, as the professor
said?
Mr. Sassi. I would contend that we do not participate in
post-claim underwriting.
Mr. Stupak. You have 1,400 codes that trigger a review of
policies, right? You have 1,400 and Assured has 2,000 different
codes. Once you trigger one of those codes, there is an
automatic review to try to get out and rescind that policy?
Mr. Sassi. Not necessarily, only if it is----
Mr. Stupak. But there are 1,400 codes, right? Can you say
``Yes'' or ``No'' to that?
Mr. Sassi. Yes. And there are----
Mr. Stupak. OK.
Mr. Sassi [continuing]. Tens of thousands of medical
conditions.
Mr. Stupak. Mr. Hill for a question, please?
Mr. Hill. Thank you, Mr. Chairman. I have got a few
questions for you particularly, Mr. Sassi, but I also have a
general question I want to ask.
Do either one of you offer incentives to your employees
when they are able to find some reason they need to file this
rescission?
Mr. Collins. Absolutely not, Congressman.
Mr. Sassi. WellPoint does not have a policy to offer
incentives or a pay/borrow system to employees.
Mr. Hill. How would you respond to the one woman who said
that she had a friend of hers in church whose job it was to
find reasons we cancel policies? Any explanation of that? She
gave her testimony under oath. So it has to be an accurate
statement.
Mr. Collins. Well, sir, I really can't explain Ms. Beaton's
testimony about the practices of Health Care Services
Corporation, which is a Chicago-based Blue Cross/Blue Shield
parent company with Blue Cross in Texas.
Mr. Hill. You don't have anybody on staff to look at this
kind of thing, do you?
Mr. Collins. Well, sir, we have processes, as all insurance
companies do, including group insurance companies, to monitor
for preexisting conditions that may or may not be covered under
our policies.
Mr. Hill. Well, let me ask the question a different way,
then. That person sends in a claim, whatever it might be, heart
surgery, cancer, whatever it is. When they send in that claim,
is there a person in your company that begins a review of that
person's medical records before they pay that claim?
Mr. Collins. There is not a person that starts an
investigation based on a single item that comes into the
company. No, sir.
Mr. Hill. Mr. Sassi.
Mr. Sassi. We do have people that look for fraud and
situations that----
Mr. Hill. After a claim is filed?
Mr. Sassi. Well, we do not have departments of people that
just review claims to determine fraud. In the individual
market, we do exclude coverage for certain preexisting
conditions if those conditions exist. So we do have checks and
balances.
Mr. Hill. I think your answer is yes, you do do an
investigation of that person's medical records after a claim is
filed?
Mr. Sassi. Yes. An investigation does not turn into a
rescission in the individual market. Over 92 percent of
rescission investigations are closed with no action.
Mr. Hill. And, Mr. Collins, that is not your policy? Is
that what you are saying?
Mr. Collins. Well, my point was, sir, that based on a
single data point, we are not doing investigations. We clearly
will review claims for applicability to the policy, whether
they are covered in the policy.
There are extensive computerized claim reviews that happen.
Throughout the industry, whether it is group insurance, whether
it is individual insurance, there are--every claim goes through
a computerized system that reviews the appropriateness of the
claim and whether the claim is eligible, whether the person is
eligible, the provider is eligible who is submitting the claim.
Mr. Hill. Let me ask the question in a third way. Does a
claim trigger an investigation?
Mr. Collins. There are many ways that rescission
investigations could start. Sometimes rescissions are started
with a call from a provider, a precertification call. Sometimes
it is because a claim is submitted, but there are multiple
ways, multiple routes in which we get intelligence that there
is a claim that may have been preexisting, which may or may not
have been disclosed on an application.
Mr. Hill. And is a claim one of those triggers?
Mr. Collins. There are multiple aspects that we look at,
but a claim----
Mr. Hill. Is a claim one of them?
Mr. Collins. Yes, sir.
Mr. Hill. Mr. Sassi, you are the CEO of WellPoint's
consumer business. And your company has provided the Committee
with thousands of pages of documents relating to policies you
rescinded. I would like to ask about several policies you
rescinded here in Indiana.
In the case you identified as case number 59-71-7,
WellPoint rescinded an Indiana resident's health insurance
because he failed to disclose a condition called chronic
obstructive pulmonary disease, or COPD. Are you aware of this
claim?
Mr. Sassi. I am not aware of the specific case.
Mr. Hill. Mr. Sassi, these are documents you provided to
the Committee. These are from your own files. Our staff has
been going back and forth with your team about this case for
weeks. Are you now saying you don't know anything about it?
Mr. Sassi. I am aware that WellPoint has provided the
requested documents to the Committee. I have personally not
reviewed those documents. I am aware that there is a high level
of----
Mr. Hill. Let me ask you this. The doctor in this case
proved that WellPoint made a mistake. Why did the policyholder
have to go out and hire a lawyer to convince you to reinstate
the policy? Why didn't you believe the doctor?
Mr. Sassi. Again, I know nothing about the details of the
case.
Mr. Hill. OK. Well, you know, I wish I could stay and ask
questions. It is obvious that the claims procedure does trigger
investigations. And you had people that are going through the
very small details of a person's medical history in order to
find a way of denying that claim. I think it is rather obvious.
Mr. Chairman, let me thank you for coming to Indiana to
hold this hearing. It is very important that we get to the root
of a lot of reasons that have been offered here as to why
claims are denied.
We appreciate your leadership in this particular issue.
Again, we appreciate you coming here to Indiana.
Mr. Stupak. Thank you, Congressman. And we look forward to
seeing you back later today.
Mr. Yarmuth.
Mr. Yarmuth. Thank you, Chairman Stupak.
Let's just ask. Chairman Stupak showed you and you
acknowledged it, that there are 1,400 diagnostic codes that
would prompt a retroactive review of the insured. And you said
there were 20,000 diagnostic codes?
Mr. Sassi. There are thousands.
Mr. Yarmuth. Thousands more than the 1,400. What would
distinguish the 1,400 codes that prompt a review from the rest
of them? Is there a common distinction?
Mr. Sassi. I would say they are codes. And this is
particularly in the individual insurance market, where we
receive information after a policy is issued. And our claims
system would if a claim was received--it could be a pharmacy
claim, a $20 pharmacy claim--that pertained to either a chronic
condition that a member might have or some type of ongoing
condition that would prompt us to investigate whether it was a
preexisting condition or not and whether that was disclosed to
us or not on the application.
Mr. Yarmuth. Would it be fair to say--and if not, would you
correct me?--that the distinction would be that these are
diagnoses that would require relatively expensive and long-term
payments?
Mr. Sassi. I would say not in all cases because many
pharmacy claims that come in for meds are for----
Mr. Yarmuth. I'm talking about the condition itself, not
the actual individual claim. What we were talking about here--
and Jim Stupak has a list. I have a list of Blue Cross in
California, for instance. And it is individual plans, table of
diagnoses, subject to retroaction review.
And it is not a list of 1,400. It is a list of two pages
long. I am sure there is a third, three pages long. And it is
things like diabetes, neoplasms, or cancers, schizophrenic
disorders, asthma, rheumatoid arthritis, emphysema, chronic
renal failure, not anything like chicken pox. These are things
reading across this list that would require lengthy, expensive
treatment.
Would you say that is true? I mean, would a diagnosis in a
child of chicken pox prompt a retroactive view of the claim or
the medical history?
Mr. Sassi. Most likely not, but from looking at that list,
I would say not every condition is necessarily an expensive
condition. Many people have these conditions and for very
little cost.
Mr. Yarmuth. I am not sure it has been said at this
hearing, but I know that it came out at a hearing in Washington
that over the past 5 years, there have been approximately
20,000 rescission cases that saved according to insurance
company data $300 million. That averages out. My math is $15 a
case.
If you were to have a situation like some of the ones we
heard here today--we had two cases of breast cancer on the
panel before us, before you. Sir, could you give us an
estimate, either one, Mr. Collins, Mr. Sassi, of what the
average expenditure for treatment of the cases that you heard
today might be?
Mr. Collins. Not off the top of my head, Congressman. No,
sir.
Mr. Yarmuth. Could you give me a range?
Mr. Collins. The range, sir, is like--I really couldn't,
sir, give you a reasonable estimate.
Mr. Yarmuth. Would you think that $15,000 is probably as
little as in the case of breast cancer the cost of a double
mastectomy and the ensuing chemotherapy and in some cases
reconstructive surgery? Would you say that those situations
would cost substantially more than $15,000?
Mr. Collins. For all of those conditions together, yes,
sir.
Mr. Yarmuth. So the odds are that if there were 20,000
rescission cases over the last 5 years, the actual savings to
the insurance companies, even though they might not be able to
calculate it because a lot of it is prospective, could be
substantially more than $300 million. In fact, it could be in
the billions of dollars.
I will ask it another way. Is it unusual for a cancer
regimen, a treatment regimen, to be in the hundreds of
thousands of dollars?
Mr. Collins. No, sir.
Mr. Yarmuth. Right. I think the problem that a lot of us
have is we look at the insurance company profits over the last
few years in light of the rest of the indicators in the
economy, we see WellPoint's profits having increased in 7 years
by something like 1,300 percent from 200 and some million to 3.
something billion and United HealthCare's profits increasing
over 500 percent in the same period of time. And we hear cases
of rescission in which we know that literally hundreds of
thousands of dollars per case could have been saved.
And we question whether this is a policy that is being
implemented, Mr. Sassi, as you said, to be shared to those
people who don't knowingly misrepresent the policies and
whether it is strictly a financial consideration.
And, I mean, we know that the premium increases of 100
percent in the individual market over that same period of time
do not particularly relate to costs in the economy. They don't
relate to salary increases.
So I would say that we are trying to decide what to do. You
know, I am very pleased to see that we have a pretty good
consensus of the fact that we need to do many of the things
that we are talking about doing in Congress.
I would basically say, to what can we attribute these
incredible profit margins when we are trying to deal with
making sure that individuals such as the ones we saw here are
given the care that they need and that they contracted for?
Mr. Sassi. Well, I can't speak to the numbers because I
haven't seen the numbers, but going back 7 years, I think the
large increase in profit numbers is not comparing necessarily
apples to apples.
Seven years ago, WellPoint was a much, much smaller
company. The last 7 years, we have merged with several other
companies. And so I think that would account for much of which
you--in fact, the last 7 years, our profit margins have not
been going that well.
Mr. Yarmuth. Mr. Collins, would you like to comment on that
as well?
Mr. Collins. Yes, sir. UnitedHealth Group has grown via
acquisition, much as WellPoint has. And I think that the point
that Mr. Sassi made around the comparability of numbers over
time is one of those things.
UnitedHealth Group is one of the largest health care
organizations in the United States. We touch 70 million
American consumers. And we grow value to the system. And people
pay us for the value that we add to the system.
We help pull down costs. We help organize the care, the
delivery of care. We are involved in just about every aspect of
delivery. And most of the innovation that has come forward in
the past 30 or 40 years around health care delivery has been
financed by and facilitated by the health insurance industry.
So I think that as one of America's largest businesses, we
are entitled to a healthy profit margin. And we have been very
prudent about our investments through this financial turmoil
that we have had. And the company has got a good, sound balance
sheet. It is in good shape to take care of the customers that
meet its commitments. And we don't apologize for that.
Mr. Yarmuth. Let me just ask two quick questions, Mr.
Chairman. And then I will yield back my time.
In light of what you have said, you indicated that there
has been a fairly substantial concentration going on in the
insurance market over the last decade. Is that a fair
characterization of what you said?
So that when opponents of what we are trying to do in
Congress say, ``Well, there is already substantial competition
out there in the market,'' what you are saying is that
competition has diminished over the last decade. Is that true?
Mr. Sassi. I would say that there has been a fair amount of
consolidation within the health insurance industry, but, as the
Nation's largest health insurer, insurance company, we still
have on average only 30 percent market share. In the vast
majority of our markets, there is healthy competition amongst
literally tens, sometimes hundreds of----
Mr. Yarmuth. You have 30 percent of the market share in the
country. And UnitedHealth has how much?
Mr. Collins. I don't know off the top of my head.
Mr. Yarmuth. A substantial amount, right? And this
represents substantial competition in your minds? I think your
company in Kentucky controls 59 percent of the market. Do you
consider that a healthy, competitive environment or are you
just good at it?
Mr. Collins. One of our toughest competitors is located
right here in Louisville: Humana.
Mr. Yarmuth. Thank you for that shout-out, yes.
Mr. Collins. On the front lines, sir, I mean, there is
quite a bit of competition. In fact, there has been a large
number of new entrants into the individual health insurance
market.
And I would urge the members of the Committee if they had a
moment just to go to ehealthinsurance.com and put in your Zip
code and see what pops up. You will find that there is a wide
variety of carriers. There is great transparency in the
individual market in terms of price and product. And there is a
lot of competition in this marketplace. We have had a lot of
new entrants.
Mr. Yarmuth. I would be interested, and I will do that.
One final question. When you have somebody who has been in
your individual market for 10 years and they have been paying
premiums for 10 years and they end up like one of our former
panelists and they have a serious illness and their policy ends
up being subject to rescission, how is that handled? How do you
handle all the premiums they have been paying you for all of
those years?
Mr. Sassi. WellPoint would not rescind the policy after 2
years. So if someone had been paying a premium for 10 years, we
would not look at that, irregardless of----
Mr. Yarmuth. They were not the subject of rescission. OK.
What if they fell within the 2-year period, if they have been
paying for 2 years? What would you do with their premiums?
Mr. Sassi. Well, as I outlined in my testimony, we have a
very thorough process where we review. We reach out to the
members to see if there is any additional information the
member could provide. We share the information that we have. It
goes to a committee that is established with the doctor that
makes the decision and multiple appeal processes, including
binding third party appeal and a third party review.
Mr. Yarmuth. That is all wonderful. What I am saying is if
you decide to rescind their policy, they have been paying for
20 months and then you rescind their policy, what happens to
the premiums they have been paying?
Mr. Sassi. The premiums would be refunded less any claims
that were paid.
Mr. Yarmuth. OK. Is that the same policy you would have,
Mr. Collins?
Mr. Collins. We refund 100 percent of the premiums on the
policy.
Mr. Yarmuth. OK. That is all I had, Mr. Chairman. Thank
you.
Mr. Stupak. Thank you, Mr. Yarmuth. Thanks again for
joining us. Thanks.
Well, let me ask this question just on competition. You say
there is so much competition between you, between the insurance
companies. Isn't it true that the insurance companies are not
subject to antitrust laws?
Mr. Collins. I am not prepared to answer that question,
sir.
Mr. Stupak. Maybe Mr. Sassi?
Mr. Sassi. I am not an attorney.
Mr. Stupak. So when the Energy and Commerce Committee does
the markup of H.R. 3200, the national health care bill, when I
offer my amendment to take away the antitrust exemption for
insurance companies, you have no objection to that?
Mr. Collins. Sir, my testimony was I am not prepared to
testify on that. And I am really not an expert in antitrust
matters in any way, shape, or form.
Mr. Stupak. It is only the insurance industry and Major
League Baseball that are not subject to antitrust laws.
Therefore, you can set the profits wherever you want. And we
would have no recourse.
Competition. The average health insurance premium for
Indiana employers and employees went from $6,628 in 2000 to
over $12,153 in 2007. In that group, 116 percent were
individuals and 75 percent for employers. Doesn't that account
for the huge profits you had?
Mr. Sassi. I think that probably accounts for an increase
in health care costs.
Mr. Stupak. Well, accounting for the increase in health
care costs has been why would your profits according to SEC go
from 2.4 billion to 12.9 billion?
And if you take WellPoint, Mr. Sassi, your profits
increased from 226 million in 2000 to 3.45 billion? To me, that
is a 1,380 percent increase. So it can't be health care costs.
It has got to be the record premiums you are charging people.
Mr. Sassi. Well, as I have previously testified, looking
back at the starting points, WellPoint was a much different
company. And we have grown dramatically through acquisitions of
other companies.
Mr. Stupak. Sure.
Mr. Sassi. So I don't think it is an apples to apples
comparison.
Mr. Stupak. Sure, but you said that the reason why premiums
went up is because health care costs so much nowadays, costs so
much to deliver health care. Then if that is the case, you
would be paying out more money, and your profits would be less.
You wouldn't be having a 1,380 percent increase.
Mr. Sassi. Chairman, the point that I was trying to make is
that 7 years ago, we were a company of a million members. And
now we are a company that insures over 35 million members----
Mr. Stupak. Sure.
Mr. Sassi [continuing]. With a combination of many
companies.
Mr. Stupak. Sure. But you said the reason why you had to
charge, you went from $6,600 to $12,000, was because health
care costs went up. But, of course, corresponding is the fact
that your profits also went up 1,380 percent when the cost of
health care basically went up 116 percent. There is quite a
disparity there, no matter how many people you cover. If you
cover more people, you would have more costs.
Let me ask you this question. The American Insurance Plans
wrote us a letter. Are you both a member of AHIP, America's
Health Insurance Plan?
Mr. Collins. Yes.
Mr. Sassi. Yes.
Mr. Stupak. I want to ask a question about no longer doing
rescissions without intentional fraud. You know, I know today
you sort of danced around it. After I asked a question in
Washington, the AHIP wrote a letter, said, ``Well, the
companies focused their responses on specific legal standard
referenced in the question. They will not rescind an
individual's coverage on the basis of a preexisting medical
condition which the policyholder was unaware of at the time he
or she applied for coverage.''
So will you commit today that you will not rescind an
individual's coverage on the basis of a preexisting medical
condition which the policyholder was unaware of? Will you
commit to that today, Mr. Sassi?
Mr. Sassi. Yes. I previously testified to that this
morning.
Mr. Stupak. You, too, Mr. Collins?
Mr. Collins. Yes, sir. That is the knowing standard I was
testifying to earlier.
Mr. Stupak. OK. Then it goes on to say, ``And are you
committing that you will only rescind the policy to the
policyholder as materially misrepresenting their knowledge,
health status or history?''; so a material misrepresentation.
Is that correct? You do that?
Mr. Collins. Yes, sir, material misrepresentation or
omission on the application.
Mr. Stupak. Is that your standard, too?
Mr. Sassi. Yes, that is our standard.
Mr. Stupak. OK. So we are making some progress. Let me ask
you this. Mr. Sassi, Mr. Hill asked you a number of questions
about victims of rescission here in Indiana.
And our Committee also asked you questions and asked for
your cooperation so we could contact them. In fact, last week
we sent you a letter listing four cases here in Indiana. And
they were case number 59-717-60, number 65-86, number 67-20,
and number 65-83. And we asked you to send these people a
letter and ask them to contact the Committee. And you refused,
saying that you could not do that.
Why did you refuse to contact these policyholders?
Mr. Sassi. It is our understanding that the request being
asked of us would have violated HIPAA.
Mr. Stupak. How would it violate HIPAA when the insurance
company is contacting their policyholder?
Mr. Sassi. Again, I am not an attorney. And I believe that
our attorneys were working closely with the Committee staff to
determine if and how we could comply with your request.
Mr. Stupak. Well, we checked with CRS and everyone else
that under privacy laws, your company, WellPoint, clearly falls
within the definition of a covered entity. And you are
permitted to use or disclose an individual's protected health
information to the individual. It was up to the individual to
contact us.
So would you contact those folks and have them contact our
Committee?
Mr. Sassi. I will take that under advisement and speak with
our legal team.
Mr. Stupak. OK. Maybe we will have to use our--let me ask
you this, then. The Reilling case, Ms. Reilling who was here,
why did you cancel her out? Do you still offer these one-group
policies, these one-person group policies?
Mr. Sassi. Chairman, Ms. Reilling's case, here today was
the first that I had heard of that case. While she was
testifying, we did do some research. And Ms. Reilling was
covered under an employee policy issued by Kentucky Retail
Federation.
Mr. Stupak. Correct.
Mr. Sassi. So it was an employer plan. And apparently the
eligibility rules of that employer plan indicate that groups
must have two members. And so it is my understanding that the
association, Kentucky Retail Federation, does not insure groups
of one.
Mr. Stupak. Are you saying Kentucky Retail Federation told
you to cancel Ms. Reilling's?
Mr. Sassi. They are the policyholder.
Mr. Stupak. Really? So for the last 15 years when you
allowed Ms. Reilling to have this policy, did Kentucky Retail
Federation pay that premium?
Mr. Sassi. Chairman, again, this is the first I am hearing
about this. We would be happy to investigate the situation----
Mr. Stupak. Mr. Sassi.
Mr. Sassi [continuing]. And provide something for the
record.
Mr. Stupak. You are under oath.
Mr. Sassi. Yes.
Mr. Stupak. You are not here telling us that Kentucky
Retail Federation was responsible for providing Ms. Reilling a
policy. You were. You didn't go through Kentucky Retail
Federation to provide a policy or even to contact Ms. Reilling
on her policy.
Everything, every document you have had, everything you
have seen--and if you did your due diligence, everything is
between your insurance company and Ms. Reilling or your
insurance company and Ms. Reilling's agent. There is no
Kentucky Federation.
Mr. Sassi. Chairman, again, based on my limited
understanding of the situation, my understanding is that Ms.
Reilling was covered under a policy issued----
Mr. Stupak. Do you still write single-person group
policies?
Mr. Sassi. I believe other associations. Associations do
have that option.
Mr. Stupak. So you still write single-person policy
coverage?
Mr. Sassi. I can't definitively say. Again, I would be
happy to research the matter and provide a response for the
record.
Mr. Stupak. Well, you did for her for 15 years. So why was
she canceled? Was it because she was sick in the last year?
Mr. Sassi. Chairman, unfortunately, you have exhausted my
knowledge of the situation. Again, I would be happy to research
it and provide a response for the record.
Mr. Stupak. OK. You said federal privacy laws prevented you
from contacting your own policyholders to contact our Committee
if they so choose. Under Ms. Reilling's case, federal law,
HIPAA, prevents you from canceling a contract that is in
effect. You can't go back and cancel it under HIPAA law.
So why did you cancel it? It seems like you rely on federal
law when it is in your best interest, but when it is not in
your interest, you don't follow federal law.
Mr. Sassi. Again, my understanding is that Ms. Reilling was
covered under an employer contract.
Mr. Stupak. For 15 years.
Mr. Sassi. It has eligibility requirements. And, again, I
would be happy to research it. I don't know if----
Mr. Stupak. So, Professor, under HIPAA, could they cancel
Ms. Reilling's policy?
Ms. Kinney. I would be reluctant to answer without all of
the facts, but the purpose of HIPAA is to enable people to
maintain their policy.
Mr. Stupak. And then HIPAA says you can't cancel unless you
have----
Ms. Kinney. Unless you have the statutory standard that is
included in your excellent supplemental report and basically
intentional misrepresentation or failure to pay the premium.
Mr. Stupak. Right. And she was able to. In fact, they even
sent Ms. Reilling a renewal. They sent her a renewal, and then
they sent her a rescission, all in the same month. But HIPAA
prohibits insurance companies from rescinding or otherwise
discontinuing individual insurance coverage unless there's been
a fraud or intentional misrepresentation of a material fact by
the applicant.
Ms. Kinney. The problem with HIPAA is that I think it
doesn't go far enough. It does not address rescissions. A
rescission is when you have the contract that existed in the
first place.
Mr. Stupak. Sure.
Ms. Kinney. It is like an annulment versus a divorce.
Mr. Stupak. She wasn't rescinded. She was just failed to
renew. And HIPAA goes on to state that ``A health insurance
issuer that provides individual health insurance coverage to an
individual shall''--it is mandatory----
Ms. Kinney. Right, but HIPAA----
Mr. Stupak [continuing]. ``Renew or continue in force such
coverage at the option of the individual,'' Ms. Reilling.
Ms. Kinney. Right.
Mr. Stupak. So under HIPAA, the failure to renew here since
they did it for 15 years straight puts you in violation of law.
Ms. Kinney. It would be my view that they are in violation
of the law having seen what is before us before.
Mr. Stupak. Let me ask you this, Professor, if I may. In
your chart, page 3----
Ms. Kinney. Yes.
Mr. Stupak [continuing]. It is interesting when I was
looking at it. It looks like basically from a child until age
60, the premiums for women are always higher until you hit 60.
Then finally the men have a higher premium. Now, I understand
there are child-bearing years in there, but is there any reason
for that or is that just coincidence?
Ms. Kinney. I would really have to give that to
underwriting and actuarial science, which always is a
mysterious process. And I think that these are determined based
on the experiences that the insurance industry generally has
with people in this age, sex, and so forth.
Mr. Stupak. You agree with me, though, these four plans
laid out until age 60, women pay higher premiums than men?
Ms. Kinney. Right. I saw that, too. I mean, I was putting
this together basically Thursday, Friday. And I was kind of
struck by that observation, too.
Mr. Stupak. Well, let me go back to Mr. Collins and Mr.
Sassi since our first panel was all women. I am not trying to
come to conclusions here, but do you charge women more? Do they
have greater health risks than men as a general rule, Mr.
Collins?
Mr. Collins. In Golden Rule's actuarial duties, the
individual policies that we sell, if you stacked up the
policyholders through age 65, men would pay slightly more than
women over the course of a lifetime if you took 1 policyholder
for each age and laid them out.
Mr. Stupak. Right. But of the 60, women pay higher
according to the professor's chart. Is there a reason for that?
Mr. Collins. Well, that is the Indiana high-risk pool that
you are looking at. I don't think it----
Ms. Cutter. Yes.
Mr. Stupak. Yes, you are right.
Ms. Cutter. Mr. Chairman, if I may?
Mr. Stupak. Sure.
Ms. Cutter. That is from the Indiana Comprehensive Health
Insurance Association. Those actuarial bases are established by
a national firm called Millimen.
Mr. Stupak. Right.
Ms. Cutter. And they use data from multiple areas to
determine what the prices should be for individual contracts in
Indiana based on geography, age, gender, that sort of thing.
Mr. Stupak. Surely. Didn't it strike you as funny as the
Insurance Commissioner that up to age 60, women pay more than
men?
Ms. Cutter. Women generally pay more for health insurance
during those child-bearing years from about 20 up until about
50. And then it starts to more even out, as you have noticed,
that by age 60, then, the men are tending to catch up.
The other thing that----
Mr. Stupak. Well, I guess I would agree with that up to
maybe 19 to 40-45, but even as a child, it seems like it is the
boys who are jumping off roofs. It is not young girls. Why
would they pay more or why between 50 and 60, they would pay
more?
Ms. Cutter. I would have to look at the actuarial data that
Millimen has collected in order to generate those pricings. But
most of the time, women tend to be more careful about their
health than men tend to be until they get into those upper
ages, when, unfortunately, our bodies just don't work as well
as they had 20 or 30 years previously. And I think that is the
point at which men's health starts to catch up in terms of cost
with women's health.
We would be glad to get that information from Millimen, Mr.
Chairman, if you would like to have that.
Mr. Stupak. Let me ask you this question, if I may. I want
to make sure I understood this right. So if I write an
insurance policy in Indiana, an individual policy, after 2
years, I can't rescind it, no matter what?
Ms. Cutter. That is correct. The incontestability clause
only addresses the first 2 years of a policy. I believe Mr.
Sassi made a comment earlier in his testimony where you asked
him if somebody had paid a premium for 10 years and, all of a
sudden, you found out there was something wrong with the
policy, you couldn't cancel it. His answer to that was no.
Mr. Stupak. OK. So there is no rescission after 2 years.
Have you investigated rescission practices here in Indiana?
Ms. Cutter. We have. We have had 14 of those investigated
for the year 2008.
Mr. Stupak. So 14. And what were those reasons for
rescinding those 14?
Ms. Cutter. There are multiple reasons. Generally speaking,
as I said earlier, they were for a claim that was related to a
critical condition that had not been revealed on the
application by the applicant.
Mr. Stupak. So intentionally not renewed or
unintentionally? It made no difference?
Ms. Cutter. There were about three or four of those cases
where we concluded similar circumstances to Ms. Raddatz's
testimony, where there was information that the doctor had
indicated in medical records that the patient was completely
unaware of. And, therefore, in those circumstances, rescission
was withdrawn or other terms are transforming with that at the
10-4 coverage with the weight for a particular provision.
Mr. Stupak. Let me ask you this. In your testimony, you
said, ``Our policy analysts also review the language contained
in any applications used for individual health policies to make
certain that there are no all-inclusive or have you ever or
questions using medical terminology too complex for the average
consumer to understand. No insurer may use an application
without our stamped approval on that form.'' Is that correct?
Ms. Cutter. Yes, sir, it is.
Mr. Stupak. The binder right there, the red book right
there, would you take a look at it in tab number 18? That is
actually tab number 18 is actually AMBIEN's individual
application kit. And if you go to page--I believe it is page--
let me find it here--page 8, start with question, it looks
like, 16 there on that form. It says, ``In the last 5 years,
have you had an illness, physical injury persisting or new
physical and/or health problems not mentioned elsewhere in this
application that you have not been evaluated for that you plan
to have evaluated by a licensed health practitioner?''
It sounds like this sort of question is sort of an all-
inclusive, ``Have you ever?'' type question.
Ms. Cutter. Well, it is limited to a time element of 5
years looking back.
Mr. Stupak. OK. So it is everything you had in 5 years.
Ms. Cutter. Exactly. We don't like questions that say,
``Have you ever?'' just as you had stated.
Mr. Stupak. OK. So you don't like that question, but they
do have that in there, right?
Ms. Cutter. Well, giving a time limit that we will allow
them to say, ``In the last 5 years, has anything else happened
to you that hasn't been previously asked?''
Mr. Stupak. So if you ever had a common cold, you should
put that down, too, in the last 5 years? I am not trying to be
flippant, but----
Ms. Cutter. No. I totally understand.
Mr. Stupak. OK. Well, then, another question--and here is
where I am on page 16 because you have got to help me out with
this one.
Ms. Cutter. On page 16?
Mr. Stupak. I am sorry. Question 16 on page 8.
Ms. Cutter. All right.
Mr. Stupak. ``Within 5 years, have you ever been diagnosed
with or treated for any of the following?'' and ``Kelosi's
enditis, Oucher's disease, pneumocystic carinii pneumonia, and
sploridia''? What are those?
Ms. Cutter. Those are diseases that if you had had a
diagnosis for, you were going to know that disease.
Mr. Stupak. Sure. Can you tell me what they are? I mean, I
might have it and no one ever told me.
Ms. Cutter. I can tell you what several of them are. I
can't tell you what every single one of them is.
Mr. Stupak. Well, what is Kelosi's enditis?
Ms. Cutter. You would ask the one that I don't know.
Mr. Stupak. Well, you don't even know what the common name
of it is? Is it like tendinitis? I don't know.
Ms. Cutter. No. I think----
Mr. Stupak. Do we know what----
Ms. Cutter. I think it is much more serious than----
Mr. Stupak. OK. How about Oucher's disease? What is that?
Ms. Cutter. I don't know that one either. Hemophilia I
know, muscular dystrophy, multiple sclerosis.
Mr. Stupak. Oh, yes. Yes. I think we all know those.
Ms. Cutter. Right, right.
Mr. Stupak. But there are about six terms there I have no
idea. But isn't your job to weed these out to make sure it is a
common understanding so we don't make a misrepresentation on
the application forms, we don't get behind?
Ms. Cutter. Absolutely it is our job and my----
Mr. Stupak. Can you go back and look at this application
and see if there is something we should do to improve upon it?
Ms. Cutter. My point would be that those specific
conditions that are listed are so unusual that you are not
going to have one of those without a doctor having made a
diagnosis about that particular condition because they are
relatively serious conditions.
Mr. Stupak. Sure. So you are saying because one of those
words is on there, someone might have said that to me, I should
know it, right? And I should know what the illness is?
Ms. Cutter. I would say if you have been given a diagnosis
by a physician for one of those conditions, you would be well-
aware of that condition.
Mr. Stupak. I see. OK. Do you support on rescission the
Connecticut approach, which basically prohibits post-claims,
underwriting? Companies must do their underwriting up front. Do
you support that idea?
Ms. Cutter. I would certainly entertain that idea. Our
concern would be what kind of time line that would involve
because I have to tell you very honestly that most physicians'
offices--and not that I blame them for this--insurance papers
are the last thing that they will deal with in a physician
office.
Mr. Stupak. Well, do you think it is fair you would be
accepting, insurance companies accept, your premiums while they
don't know if they are going to accept it or not? Shouldn't
they have all of the information up front?
Ms. Cutter. I think that there probably is a deeper level
of information that could be collected up front. I would agree
absolutely with that.
Mr. Stupak. How about the fact that in Connecticut, the
State insurance commissioner reviews all rescissions and makes
a decision within 15 days? State Insurance Commission and the
party have to make a decision within 15 days. Do you think that
is fair?
Ms. Cutter. We would be actually open to that sort of
consideration.
Mr. Stupak. OK. Is there an appeal process in Indiana? If I
get rescinded, who do I appeal to?
Ms. Cutter. The Department of Insurance. And we investigate
the rescission circumstances and have the ability to work with
the insurers to either overturn that rescission or make other
arrangements for the policyholder to have coverage.
Mr. Stupak. Mr. Sassi, you said that WellPoint has an
appeal process, right?
Mr. Sassi. Yes.
Mr. Stupak. How come Ms. Reilling wasn't given an appeal
process when you canceled her insurance?
Mr. Sassi. We do have an appeal process. Again, I am
unfamiliar with the details in Ms. Reilling's case. Everyone
covered under insurance has an appeal process and particularly
for rescissions in the individual market. As I detailed in my
testimony----
Mr. Stupak. Right.
Mr. Sassi [continuing]. We have multiple levels of appeal
process.
Mr. Stupak. That is why I am confused. You canceled Ms.
Reilling without any appeal process. The letter just says: You
are out of luck. We will offer you something else, but we are
not going to offer you that.
Mr. Sassi. Again, my understanding is Ms. Reilling was not
covered under an individual insurance policy. She was covered
under an employer group policy.
Mr. Stupak. So if you are covered underneath a group
policy, you don't get an appeal process?
Mr. Sassi. No. We do. All of our policyholders do have an
appeal process, grievance and appeal.
Mr. Stupak. Then she should have an appeal process, right?
Mr. Sassi. Absolutely.
Mr. Stupak. Well, take a look at the binder there, number
23 right there. I don't see anywhere it says she has an appeal
process. It says, ``Thank you for considering us. We have been
around for over 60 years. We have helped people in the
community get coverage. We are writing to your application. We
deny you. We will offer you something else.''
Mr. Sassi. Well, I think----
Mr. Stupak. ``And if you have life insurance, you are
denied also.'' But I don't see anywhere it says any kind of
appeal process or anything.
Mr. Sassi. Well, I think this letter does not pertain to
her losing eligibility in her group insurance policy. She would
have an appeal process with her group policy. It looks like--
and, again, this is the first time I am looking at this--that
this is the declamation for individual insurance.
Mr. Stupak. So you are saying that she would have gotten a
letter that describes an appeal process when you denied her her
coverage? Somewhere it would have said she would have gotten an
appeal, ``You have a right to an appeal''?
Mr. Sassi. Well, if she was covered under the association
plan,----
Mr. Stupak. Right.
Mr. Sassi [continuing]. As I understand----
Mr. Stupak. Right.
Mr. Sassi [continuing]. The employer, I believe, was
responsible for providing the appeal rights.
Mr. Stupak. The Kentucky Federation of Business had to
provide her her appeal rights. Why wouldn't you? You are the
insurance company.
Mr. Sassi. Well, it is an employer plan. And appeal rights
are covered in all of our member----
Mr. Stupak. She is her own employer. She was an employer.
So how would she tell herself to appeal?
Mr. Sassi. Again, she was a member of a larger group.
Mr. Stupak. Kentucky Retail Federation and Better Business.
So the federation had to tell her her appeal rights? How would
they know your appeal rights? Wouldn't you know your appeal
rights? Wouldn't your company know? You are expecting----
Mr. Sassi. All members have access to appeal rights. It is
in the member certificates that we issue to members.
Mr. Stupak. Let me ask you this, then. I mentioned section
162. That is the section in the pertinent part of the health
care bill we are marking up in committee. When I say ``marking
up,'' we are amending it and altering it and maybe change it as
it goes to the full floor of the U.S. House of Representatives
for a vote.
Basically what the bill says is a health insurance insurer
may rescind health insurance coverage only upon clear and
convincing evidence of fraud. So would you agree with that, Mr.
Sassi, that they can only rescind based on clear and convincing
evidence of fraud?
Mr. Sassi. Well, when looking at the House bill----
Mr. Stupak. Right.
Mr. Sassi [continuing]. That is before you today, looking
at rescission in the context of eliminating medical
underwriting, having a guarantee issue in the individual
market, coupled with effective and enforceable personal
coverage requirement, we do agree with the rescission
statements that are in the bill.
On a stand-alone basis, that is taking pieces out of
context, but we do agree with the premise. Coupled with
elimination of that preliminary thing in an enforceable
personal coverage requirement, yes, we would agree with what is
in the bill.
Mr. Stupak. Mr. Collins, do you agree with what is in the
bill?
Mr. Collins. Well, sir, we would certainly agree in the
context of health care reform agenda that the House is pursuing
that includes enforceable mandate, subsidies for low-income
people. It is important that the pool of people who are outside
of coverage be as small as possible and that we get as many
people covered as we can in order to make this work effectively
because affordability is the primary barrier to access.
Mr. Stupak. Right, but I am not asking about affordability.
I am asking about health insurance insurers may rescind health
insurance coverage only upon clear and convincing evidence of
fraud. Would you agree with that?
Mr. Collins. Well, sir, I would agree with the overall
context of health care reform, that that is a workable
standard, yes, sir.
Mr. Stupak. OK. Well, then the legislation has another
provision that requires insurance companies to provide ``the
individual with notice of such proposed rescission and an
opportunity for review by an independent external third
party.'' Do you agree with that?
Mr. Collins. Well, sir, there is a host of--most states
have some sort of external third party review requirements in
place today for claim review, for claims that are denied, and--
--
Mr. Stupak. Well, this is for rescission. So would you
agree that there should be----
Mr. Collins. Well, I am drawing an analogy, sir.
Mr. Stupak. OK.
Mr. Collins. I think that those processes work fairly well
for us.
Mr. Stupak. So you have no problem with that, then?
Mr. Collins. Certainly in the context of reform, it would
be a valuable service to the public, sir.
Mr. Stupak. Mr. Sassi, do you agree it should be an
independent third party review?
Mr. Sassi. In 2008, WellPoint already implemented an
independent third party review. So we have no issue with this.
Mr. Stupak. Why didn't Ms. Reilling get an independent
third party review, then, if you had it in there as a company
policy since 2008? She was denied here in this month, June.
Mr. Sassi. Again, Ms. Reilling was not covered under an
individual insurance policy.
Mr. Stupak. So only individuals have third party review. If
I am a part of a group, don't I get third party review?
Mr. Sassi. Currently. That was a change we made to our
rescission practices in the individual market.
Mr. Stupak. So if you are a group, you are out of luck?
Mr. Sassi. You have other appeal rights.
Mr. Stupak. OK. I have to go through my employer to find
out what they are or does your company tell us what they are?
Mr. Sassi. We issue certificates of coverage that detail
the benefits in each of our plans. And each of those
certificates of coverage has appeal rights.
Mr. Stupak. Professor, it sounds like we are playing
semantics here. Are we in a way?
Ms. Kinney. Well, I mean, different classifications do have
meanings, but it does seem that the witness earlier that Ms.
Reilling had appeal rights. They ought to have been fairly
clearly expressed to her and accessible.
Mr. Stupak. One of the things I have asked the Committee to
do is have an amendment ready that not only do you have only
rescission based on an intentional fraud and proven by clear
and convincing evidence but also have an independent third
party review but give it 30 days. Is that reasonable?
Connecticut has 15 days.
I guess I am trying to stop this post writing after 30 days
and also have an independent review done within 30 days because
if you are waiting for your bone marrow transplant, you don't
have a lot of time.
Ms. Kinney. Well, you might have an expedited process for
that kind of a review. For example, with Medicare appeals
processes, they have an expedited process for appealing
coverage decisions that are life-threatening ostensibly.
But here I think that the insurance industry should be able
to investigate a policy, but they need to do it in my judgment
in a shorter period of time and not be permitted for 2 years to
engage in what is basically post-claim underwriting.
Now, I think what gets to us and however you address it but
what seems offensive to many is the ability to go back and
review a chart and review statements looking for some kind of
factor that would give rise to a conclusion that there had been
a known misrepresentation.
I think that that is the practice that we really need to go
after and to clarify what is knowing. And also I thought maybe
coming over this morning that you might put in some kind of
requirement that a decision based on a review of medical
record--if the insurance company has the medical record, they
have it for 3 months, then they need to look at the medical
record in that period of time and make a decision about whether
that complies with the policy up front before even any claims
were submitted.
Mr. Stupak. Yes. It seemed like before they take your
premium, they should give you some determination based upon the
records, correct?
Ms. Kinney. Right. I suppose that the rationale would be
that if you then--you know, once you take a premium, you do
have insurance and that that speeds up the process of getting
insurance. And you might have a situation where you have a
delay in coverage if you have too many requirements up front.
But, as I understand it, another aspect of the insurance
industry, you can issue riders and temporary insurance to cover
that time. It seems to me a problem that does have a solution.
Mr. Stupak. Is it fair to say that at your Center for Law
and Health or Health and Law, if you have a health insurance
policy and you are terminated, is it fair to say it is very,
very difficult to get insurance coverage?
Ms. Kinney. I think that the testimony and the information
that has been garnered in these hearings suggest that is the
case. And certainly in our research we did years ago, which it
is probably a little dated, but once you have been canceled, it
is hard to get insurance.
Mr. Stupak. All right. Let me just take a look at one more
thing here. Mr. Sassi, you said that the first time you heard
about Ms. Reilling's case was today. Will you commit that you
will have the company take a look at that and make sure that
Ms. Reilling's rights were protected before you terminated that
policy?
Mr. Sassi. Yes, sir.
Mr. Stupak. OK. Well, I want to thank you all for coming.
That is going to conclude our questioning today. I want to
thank all of the witnesses for coming today and your testimony.
The Committee rules provide that members have 10 days to
submit additional questions for the record. I will ask
unanimous consent that contents of the document binder will be
entered into the record provided the Committee staff may redact
any information that has business propriety or relates to
privacy concerns or is law enforcement-sensitive. Without
objection, the documents will be entered into the record.
[The information appears at the conclusion of the hearing.]
Mr. Stupak. That concludes the hearing of the Subcommittee.
Thank you all for coming. Thank you for participating. And
thank you for being good hosts here in Indiana.
[Whereupon, at 1:00 p.m., the foregoing matter was
concluded.]
[Material submitted for inclusion in the record follows:]