PI Original Adam Doster Thursday April 8th, 2010, 12:54pm

Illinois: The Rescission Capitol Of The U.S.

Between 2004 and 2008, over 5,000 Illinoisans had their health insurance rescinded after they became sick -- well over the national average.  Thankfully, the recently-passed Democratic health care package bans the practice.

Since Congress passed the Affordable Care Act a few weeks ago, we've been highlighting some of the ways in which Illinois residents will benefit from the legislation. While new protections for adults with pre-existing conditions won't go into effect until 2014, the federal government (by June or July) will provide funding to expand Illinois' high-risk insurance pool, which covers people with chronic illnesses or disabilities who are blocked from the individual market. At a cost of just about $40 annually per patient, Illinois will be able to extend Medicaid coverage to hundreds of thousands of working poor residents. (By 2019, 1.3 million people will gain access to affordable care.) Illinois-based businesses will be able to shed some of the costs of covering retirees. The state will also save about $20 million a year beginning in fiscal 2012 because of federal assistance for seniors who purchase prescription drugs. And that's just a small sample of reforms the legislation ushers in.

One provision that's desperately needed in Illinois, and which we haven't highlighted recently, is a ban on rescissions. This is the practice by which insurance companies find "innovative" reasons to renege coverage for expensive policyholders facing debilitating illnesses. "[The insurance companies] look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage," former Cigna executive Wendell Potter explained before a House subcommittee hearing last June, "and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment."

This reprehensible practice is rampant here in Illinois, according to data compiled in December by the National Association of Insurance Commissioners. Between 2004 and 2008, insurance companies rescinded coverage for 5,632 Illinoisans -- 1,683 more than in any other state over that same period. NAIC also found that Illinois' rate of rescission (about 13 cases per 1,000 policyholders) was the second highest in the nation and far higher than the national average (3.7 per 1,000). One teenager's dependent coverage was rescinded because her family failed to disclose that she had a "congenital deformity." The "deformity" in question?  Braces.

Insurance Director Michael McRaith instituted a policy late last year that aimed to protect rescission victims. The measure requires an insurance company that rescinds coverage to hand over copies of its underwriting policies as part of the department's review.  Now thanks to the federal health reform package, the practice will be be banned outright.  (That portion of the new law will be effective in about six months.)

"The change in the rescission law," McRaith told the Tribune in late March, "is a significant improvement for Illinois families."

Republican health reform critics are already suggesting that the rescission ban is one of the provisions in the bill of which they approve. Of course, they made no effort to eliminate the practice when the party held congressional majorities under President Bush.


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