Abandoning the sick

In vetoing a bill that would have required state review before an insurance company could deny or rescind a customer’s healthcare coverage, Gov. Arnold Schwarzenegger has not just broken a promise to voters, he’s broken faith with them. Californians, like the rest of the country, are asking government to defend them from the unregulated excesses of big business, but who does Schwarzenegger side with -- his 35 million constituents? No. Insurance companies.

AB 1945, by Assemblyman Hector De La Torre (D-South Gate), would have protected consumers without penalizing businesses. It required that decisions by insurance companies to refuse or retroactively reject customers’ applications be subject to review by the state Department of Managed Health Care or the Department of Insurance. Most important, it forbade rescission unless a customer had willfully provided misinformation about preexisting conditions; that was the real sticking point in the bill.

But consumers, insurers and the courts need clarification of the legal standard regarding rescission, which should be intentional misrepresentation by an applicant -- not genuine ignorance. This may seem obvious, but as The Times’ Lisa Girion has reported, insurance companies dump clients because of medical conditions that arise after their coverage was approved, even when the clients had no way of knowing about a condition. And almost every major insurance company operating in California has been fined for improper rescission and forced to restore coverage. But that delayed justice can come too late for patients whose lives depend on urgent medical treatments, such as chemotherapy.

With the veto of AB 1945, insurance companies can continue to rescind patients even if they filled out their applications honestly. Of course, the companies, which have paid millions of dollars in fines, say they have learned their lesson. Aetna, based in Connecticut, has established an external review board of doctors to which patients can appeal policy revocations. Although the company can be praised, it didn’t act until after Connecticut, the insurance capital of the country, passed a law last year against unfair rescission.

Schwarzenegger wants us to trust insurers to regulate themselves. We’d love to share his confidence, but the truth is that we don’t believe that they will put the care of their patients ahead of their bottom lines -- their record makes that appear unlikely. Instead, we placed our trust in the governor, only to have him let us down.