Denying Insurance Coverage and Discriminating Against Pre-Existing Medical Conditions
Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2009/08/11 - Updated: 2024/09/01
Publication Type: Informative
Category Topic: Disability Insurance - Academic Publications
Page Content: Synopsis - Introduction - Main
Synopsis: New report examines insurance company practice of denying coverage to or discriminating against Americans who have pre-existing medical conditions. Under health insurance reform insurance companies would be prohibited from refusing coverage based on medical history or health risk.
Defining Rescission
- Rescission
Insurers have the right to rescind an insurance policy due to concealment, material misrepresentation, or material breach of warranty. Generally, to rescind, an insurer will send a notice to the insured and tender a check in the amount of the premium paid for the relevant policy period. In health insurance and specifically the individual and small group insurance markets, rescissions have generally followed the diagnosis of an expensive-to-treat illness in the patient (policyholder), typically because of withheld information about a pre-existing medical condition. Public awareness of this practice increased during the 2009 US healthcare debate, when it was described colloquially as "cancel coverage when you get sick".
Introduction
In a new report, "Coverage Denied: How the Current Health Insurance System Leaves Millions Behind," the U.S. Department of Health and Human Services examines the insurance company practice of denying coverage to or discriminating against Americans who have pre-existing medical conditions.
Main Content
A recent national survey found that 12.6 million non-elderly adults - 36 percent of those who tried to buy insurance on the private market - were discriminated against in the past three years because an insurance company deemed them ineligible for coverage because of a pre-existing condition, charged them a higher premium, or refused to cover their condition. Another survey found 1 in 10 people with cancer said they could not get health coverage, and 6 percent said they lost their coverage because of their diagnosis.
The insurance company practice of denying coverage because of pre-existing conditions is not confined to serious diseases. Even minor problems such as hay fever could trigger prohibitive responses. An insurer could charge high premiums, deny coverage, or set a restriction such as denying any respiratory disease coverage to a person with hay fever, according to the report.
What's more, some insurance companies respond to an expensive condition such as cancer by initiating a thorough review of the patient's health insurance application. If the company discovers that any medical condition, regardless of how minor, was not reported on the application, it could revoke coverage retroactively for the patient and possibly all members of the patient's family, the report said. The practice is known as rescission.
Companies can do this even if the condition found is not related to the expensive condition or if the person wasn't aware of the condition at the time.
At least one company encouraged employees to revoke sick people's health coverage through rescissions, the report said.
Under health insurance reform, insurance companies would be prohibited from refusing coverage based on someone's medical history or health risk. Companies also would be barred from watering down coverage or refusing renewal because someone becomes sick. Companies would have to renew any policy as long as the policyholder pays the premium in full.
Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.