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If you thought the insurance industry couldn’t stoop lower, think again.

Health Net (based out of Woodland Hills near L.A.) has been paying bonuses to employees based on how many sick policyholders they can drop from coverage.

In doing so, Health Net rescinded over 1,500 policies, saving itself over $35 million in medical treatment payouts. This practice was revealed in litigation over Health Net’s cancellation of a cancer patient’s coverage. Without coverage, Gardena hairdresser Patsy Bates had over $200,000 in unpaid treatment bills.

Folks, I’m not making this up.

It’s part of an industry-wide trend among health insurers. Cherry pick for healthy people, refuse to cover people with conditions that might lead to illness, and rescind policies of people who do have coverage.

Other health insurers are rushing to deny that they have bonus structures tied to rescissions. That may or may not be true.

Bates has not been able to complete all her treatments due to Health Net’s action.

Check out today’s Los Angeles Times article by Lisa Giron. You can see it by clicking here:
http://www.latimes.com/business/la-fi-i … ome-center

A comprehensive healthcare reform this year looks increasingly unlikely. Therefore, incremental work needs to be done with the system.

So the ball bounces to the Insurance Commissioner.

Steve Poizner, the incumbent Republican, needs to address insurer cherry picking and rescission practices. As a presumed 2010 candidate for governor, many eyes will be on Poizner as we see whether he is willing to be tough with the industry.

Stay tuned. Over the weekend, I’ll be doing a piece on the top 10 developments in California workers’ comp for the 3rd quarter of this year. And in the coming week, I’ll be doing more about the recommendation by the WCIRB that insurance rates be increased.

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Julius Young
http://www.boxerlaw.com/practices.html
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Category: Political developments

Julius Young

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