What if a bank told half their highest net worth clients ’sorry, you misspelled your address when you opened your account, we’re confiscating your balance’

As you probably already have learned, rescission is the insurance company practice of refusing to pay for health care because they found an (even unrelated) mistake on your original health insurance application.

But in claiming that this practice is rare, the insurance companies, whose very business depends on understanding statistics and probability, are betting that you don’t understand probability enough to catch the lie. Indeed, “Figures never lie, but liars always figure.”

For starters, even if you take the insurance company’s statement at face value — that it only affects one-half of one percent — this is a huge number of people. The population of the US is greater than 300 million people. One-half of one percent of that is 1.5 million people. They are depending on the fact that “one-half of one percent” sounds small.

But the much bigger lie is carefully documented in a brilliant article in Taunter Media, which points out that calling rescission rare is, shall we say, misleading at best. Yes, the insurance company may only cancel the policies of one-half of one percent of the total people they cover, but the more significant statistic would be what percentage of the people who have very expensive medical care claims do the insurance companies cancel? After all, the insurance companies only try to use rescission on people who have expensive claims. The insurance companies do not provide this data, of course, but based on other hard data, Taunter calculates it to be somewhat higher than fifty percent.

Would you put up with a bank that confiscated your life savings when you tried to withdraw it, because of a trivial mistake you made on your original application form? The insurance companies have even cancelled policies for omissions on application forms that the applicant had absolutely no knowledge of.

No wonder we have so many people in the US who don’t have health insurance. It is a ripoff. No wonder the health insurance industry is spending millions of dollars in misleading ads and campaign contributions to defeat a public option. Who wouldn’t choose a public option over such a ripoff?

Read it all at Political Irony

Death by Insurance Company

A friend told me yesterday about a late friend of hers. Diagnosed with breast cancer she had been scheduled for a double mastectomy. Faced with the horrifying prospect of a $30,000 payout, the insurance company pored over her records to see if she was truly deserving.

They decided that she had, improperly, failed to inform them of her high blood pressure years before when she signed up for the policy. They cleverly dodged the bullet by refusing payment just in the nick of time, I suppose by canceling her policy. Although the woman’s doctor affirmed that she had been completely truthful in her application, the courageous insurance company hung tough. Deprived of life saving surgery, the woman’s cancer spread and she died. There must have been a few knowing high fives at the water cooler that day, and some nice bonuses at the end of the year.

Read it all at Daily Kos

Rep. Stupak Questions Insurance Company Witnesses On Rescission Triggers

Over the past five years, almost 20,000 individual insurance policyholders have had their policies rescinded by the three insurance companies who testified today: Assurant, UnitedHealth Group, and WellPoint.

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