than simply layering another mandate on the american people or the employers of america. but, i don't disagree with you, that something needs to happen. and, let me just take this to a different level, and, again i want to pose the question to all three, and i really would like an answer from all three on this. if there were a system of universal coverage, without government intervention in the mark place, is there a better way to accomplish our goal of universal coverage without that excess market man nape population by the -- manipulation by the government, apparently, it happens in other markets, and to the extent this has been allowed in law, the business interests almost dictate those actions, yet, some of us have argued that if we let the market work you can make an innovative product for all. so, hea shg, here's my question. will you today publicly and

clearly commit now, regardless of what happens in washington, whatever decision that we reach on health reform, that you will design a product for all populations, regardless of claims history, but also economic status, and i would like an answer to those questions, individually, all populations, regardless of claims history an all populations regardless of economic status, would mr. hamm, let you go first and we'll go down the row. >> i'm having a little difficulty following your question, sir. if i may understand specifically what you are asking. >> regardless of what we do, whether we do an individual or a businessman date, employer mandate, maybe we don't do a mandate at all, but, you have it within your power to design a product so that all populations, regardless of claims history, could be covered. would you be willing to do that. >> in the current system, that would not be feasible. we need to have an environment

where all americans are required to participate, before we could give those assurances. >> you would not be willing to alter business practices if there were a way to do that to provide coverage for a grat greater segment of the population even with the claims history. >> if the reforms proposed by ahip are adopted, then we would be glad to participate in the system but it is necessary that all -- participate when it is a system where people choose, we need to have the process of assessing risk at the time of the application. >> with all respect, the reforms proposed by ahip will not happen. mr. collins, would you be willing to -- >> i would respectfully have to agree with mr. hamm, a guarantee issue product that would fit all people at affordable prices is economically practically impossible and what i would

suggest is hipaa also creates alternative coverage mechanisms for each and every state. so, each state is supposed to have a high risk pool or an alternative coverage mechanism and these high risk pools have been woefully under funded and one thing that could be done right now, today is increase the am of funding going into the high risk pools so people that have those serious health issues and are otherwise not insurable in the market have a place to go that is affordable and affords them the care that need. >> on the issue of high risk pools, i think the private sector is going to be required to make this contribution to that, as well. and that you all in the private sector, whether it be group insurance or individual market, there must be a product that is available to everyone regardless of their claims history and yes. they may require federal subsidy and state subsidy and yes. the private sector may have to bring something to the table as well -- >> that's it. last question, mr. burgess, are just going on. >> let me ask you, just to answer -- >> last one.

>> regardless of the claims history, the population, would you be willing to make a product available. >> i have to agree with my colleagues that in the current voluntary individual market, we could not guarantee issue policies, where people could jump in and out of the insurance market. we have had experience of states that have implemented guarantee issue without an effective enforceable personal coverage mandated and unfortunately, that has resulted in significant cost increases that have to be borne by others in the individual market. so the answer would be no. >> mr. chairman you have been generous with your time. again i would stress that this is going to take creative thinking outside the box, i don't think they are -- you are going to get what you wanted in the ahip proposal, you'll get something like what the chairman out lined for you and i would urge you to think creatively about the problem because -- because this is the difficulty that leads to us where we are

today and i can the to the help you. >> questions and speeches are over. >> i can't help you if are not willing to move on this issue, thank you, mr. chairman, i will yield back. >> we hope the chairman -- not my plan, our plan does work, we hope that and i will not argue that now, and maybe we can get another round, we have votes in a few minutes, each of you provided to the committee, information that relates to certain medical conditions that automatically triggers investigation into the possible grounds for rescission, mr mrmr. mr. sassi, i left off with you and you had 1400 automatically triggers investigation and mr. hamm, 2,000 things that trigger investigation you provide to the committee, breast cancer, ovarian cancer and brain cancer. why does cancer trigger an investigation. >> what triggers the -- >> why does cancer trigger the investigation. >> i will answer, what triggers the investigation are the types

of medical conditions of a chronic nature, where there is a high probability that the condition would have pre-existed at the time the application. it is not based on the costs of the claim. it is based on the medical condition. in fact, the people that make the rescission decision are not aware of the cost of claim. it is all about -- >> if it's the medical conditions, the medical condition, then before you sign them up, why don't you get all the medical records and find it then h why do you wait until there is a claim? >> if we were to receive all of the medical records at the time of application, that would delay the process, significantly, delaying people's access to health care, and, would add a tremendous amount of cost to the product. the vast majority of applicants provide all the information that is asked for at the time of application. >> so, a cost issue. >> -- too costly -- >> yes. it would add to the premiums that our customers would pay by a significant amount. >> so, what does it cost, $40 to

get medical records. >> i'm not familiar with the cost but also delay the process. >> but, isn't it better to delay the process to make sure a person is opposed as opposed to pulling them when they are going through cancer. >> the vast majority of our customers provide the appropriate information. >> mr. raditz, but you still denied him comfortable, right. >> unfortunately i cannot comment on that particular case. >> mr. collins, in asking the same question of united, you insisted that you also use a computerized system to identify cases to automatically investigate for possible rescission but there is no one at your company, who knew how the computer decides which files should be reviewed. so, is it the case that united has put the decision of which patients will have their health care treatment interrupted by a rescission investigation in the hands of a computer, that no one understands? >> no, sir, that is not true. i haven't really been privy to

the discussions between my staff and your staff, on this issue. we have been trying to come to an understanding, about how to best provide the data in a format that is easily understandable. and let me just say -- >> can you tell us what conditions the computer considers for a possible rescission investigation. >> no single factor is used in our process, to trigger an investigation, so we look at the system looks as it is screening claims that come in at the effective date of the policy and the effective date of the procedure and the census rarity and the type of service, and, the diagnosis code, those are all factors that go into the algorithm that pulls cases out -- >> the algorithm, no one from your company could tell us, will you commit to us today to produce whatever witnesses or documents are necessary to explain your algorithms, computer selection process, would you commit to do that. >> we are dmoodz we are still trying to figure it institute we are trying to put it into a format acceptable to the

committee, sir. >> dr. po -- professor pollitz, do you see a common thread among the conditions, 1400 conditions, 2,000 conditions, and the computer that can't explain that does rescission. why do you think they have all of these rescissions. >> i think the common thread is that's if somebody makes a claim for anything serious, in their first year, there is an opportunity to go back and review the entire transaction to see if it will be withdrawn. i think that is just the common transaction. and i think it is not consistent with your federal law. and whatever else you may do, going forward -- >> but as to the hipaa law, basically leave it up to the states and hip pa has to be enforced by the federal government, cms, right. >> that is correct. the ultimate enforcement. >> so the value of the law, depends on the enforcement of the law. >> yes, it does and there is a fine, of $100 per day, per

affected individual. for noncompliance with the law. that can be levied. >> let me ask each of our ceos this question, mr. hamm, would you commit your company will never rescind another policy unless there was an intentional fraudulent misrepresentation in the application. >> i would not commit to that. >> mr. collins, would you commit to not resinned any policy unless there is an intentional fraudulent misrepresentation. >> no, sir, we follow the state laws and regulations, and, we would not spulate to that, that is not consistent with each state's laws. >> how about you, mr. sassi would you commit your company will never rescind another policy unless there was an intentional fraud or misrepresent zen station. >> i cannot commit to that, the intentional standard is note law of the land in the majority of states. >> it is fair to resinned somebody for an innocent mistake. >> applying a knowing standard is a much more objective and -- >> first panel, they didn't have any knowledge of it and -- our first panel, none of them -- no

one made a misrepresentation but were rescinded, the policies from mrs. bates down to our witnesses, they were not aware -- >> it is our policy if we determine the applicant did not foe about a specific condition, we would not rescind. >> okay. so ms. horton, you wouldn't have rescinded her but... >> i can't speak to the specifics of ms. horton's case, i am not familiar with the specifics. i'm sorry. >> mr. barton, for questions, please. >> thank you, i wanted to thank our witnesses for being here, it -- this is a difficult situation. but, i listened when you answered chairman stupak's question about unintentional omissions. and to your credit you are honest, that you would reserve the right to still rescind some

of these policies. doesn't it bother you that people are going to die? because you insist on reviewing a policy that somebody took out in good faith and forgot to tell you that they were being treated for acne? doesn't that bother you? >> yes, sir, it does. and we regret the necessity that that has to occur even a single time. and we have made suggestions, that would reform the system, such that that would no longer be needed. >> well, you know, i haven't heard your opening statements, i glanced at them and i haven't heard the first round of questions, we understand the need to verify that people are telling the truth. we are not asking you guys to -- the insurance industry to automatically take somebody's word for it.

i mean, i understand that. but, when i see advertisement after advertisement about be a part of the family, and you know, we treat you like our, you know, own family, and then somebody who doesn't have group coverage takes out an individual policy, and runs into some situation, where they have a health care issue, that requires a major claim early in the policy, if they operate in good faith, in taking out the policy, and you approve them, i really don't think it is good business practice to go back and try and figure out a way to rescind the policy. if nothing else, it is a false trade act, false trade practice, truth in advertising. and one of the beauties of our

constitution is a little thing called federal preemption. we have the authority on this committee to preempt state law if it is is interstate commerce and we can't preempt in intrastate but we can interstate commerce and, i don't think there is one vote on this committee, for the practice of retroactively reviewing a policy to try to rescind it, if you have a woman like my constituent, mrs. bayton who discovers that she has breast cancer, and you have a -- somebody who needs a system cell transplant, or even the young lady from california, who just needed blood work done, i -- we'll back you up on fraud and misrepresentation, but, i don't think you will get a vote at all on rescissions that are not

material to the claim being processed. i don't know that that is a question, that is just a statement. so if you would like to comment on that, i -- i would certainly like to give you the opportunity to do that. >> no one cares to answer? >> i would just reinforce that rescission would only occur when the information was material to the initial -- if the situation -- if the information was material to the underwriting decision. only in that case. >> mr. chairman, i'm going to yield back, i mean, i would -- >> could i follow-up on that, if it is material, to the representation, let me ask you this: in your policy, mr. hamm, it states, a -- question number 14 on your questionnaire. your enrollment questionnaire,

now, tell me how you get a misrepresentation. with in the last ten years, this was -- you said insured health questionnaires are simple, easy to understand, straightforward language, and so people can easily and accurately report their medical history. so, your question says, within the last ten years, has any proposed insured had any diagnosis, received treatment for, or consulted with the physician concerning phlebitis, tia, lymph... or glandular disorder. what is tia. >> i'm not aware. i believe -- >> how would your -- you don't know what it. >> guest: how would anyone filling out your application know what it is and there are grounds to deny him and you don't know what it is and how about phlebitis or lymphademopathy. what is that. >> i don't know the answer to those questions.

>> do you sincerely believe an amp a can't knows what the words mean if you and i don't know. >> i believe that is an application not currently used at this time. i would like to -- >> the application. last year's application. and your -- yes, last year's application. have you changed the application last year? >> i'm sorry. >> last year's application. did you -- application, did you change it in the last year. >> i'm not aware if we have changed that application. >> so, as far as you know that is your current application. >> but i believe our current applications, ask questions back to five years, so, the ten-year might be different than what we issued today i would need -- >> it is the same questions, tia, right, you don't know what it is, and... >> i do not know what that is. >> okay. mr. deal. >> mr. chairman, i do have one -- >> sure, mr. barton i took your

time. >> this is a hypothetical but i just, i want to figure out what the answer is. i had a mild heart attack, three years ago. so i now take six different medications every day and i'm going to probably have to take this medication for the rest of my life. and i'm covered under a group plan, blue cross/blue shield of texas, and it is available to every federal employee who lives in texas. and my coverage has been good and i never had a problem. but, let's say i quit the congress, and i go into business for myself, and i try to get a private health plan like ms. beaty got when she switched jobs from being a nurse and went into business for herself. on the application, i have to list the medications that i'll taking, fact that i had a heart attack and give the doctor the time, the location, but i broke

my leg playing football in high school, i got a 250 pounds full back ran over 150 pound linebacker, i was the linebacker. now, if i forget to put on my application with your companies that i had my d -- small bone in my left leg broken playing football in 1967, but i do put all my medications and my history of my heart attack, the fact that i omitted breaking my leg in 1967, is that a grounds to rescind by claim? my policy later on? under your policy, right now, that your companies issued. >> i admit to my big problem. tell you the medications, all the stuff, but i have -- flat forget i brock my leg and was

treated for a doctor paid by the the waco independent school district in 1967. >> congressman, our underwriting guidelines really kind of dictate that. but it is my understanding of how our underwriting guidelines work, is that since that condition would the not be material in our initial under writing decision, because it happened so far in the past, and was of a nonserious nature, that that would not have factored into the underwriting. >> and i understand you might not cover me because of my heart attack, i understand that, that would be totally westbound your company's right to say, congressman barton had a heart attack in 2004, 2005, and therefore we cannot issue him a policy. and and i understand that. my question is really, about my leg injury, from way back when if i don't disclose that, does that disqualify me potentially down the road? >> mr. collins? >> sir, the application is looking for information going ten years back, so, that would

-- >> would not be material into would not be material. >> mr. hamm? >> the same answer, as mr. collins. >> okay. thank you, mr. chairman. >> mr. deal for questions, please. >> thank you, mr. chairman. we are talking here, in the private insurance market, and i believe mr. sassi you said it is somewhere in the 15 million range, is that correct? to you three gentlemen, do you also have policies that extend to erisa-type coverage plans? all three of you? >> yes, well point insures one in nine americans and the vast majority of our members are covered under erisa plans. >> mr. collins? >> yes, the majority of our membership are also in group insurance plans which are covered under erisa. >> >> the majority of our policies are individual, but we do have customers that are under erisa. >> does the same problem pertain in the erisa marketplace, as in

the private insurance marketplace, ms. pollitz you indicated you think it does into there is rescission -- >> i can't hear you. >> there is rescission in the small group market and operates a little bit differently because that is a guaranteed issue market but, the similar process, if a claim is submitted, during the pre-ex period, it is largely the eligibility of the members of the group and the family members of the group, that will be reinvest gaited to see if there is any way the people who made the claim shouldn't have been on the policy in the first place. >> but, the states period is -- period like two years do not apply. >> your pre-ex rules are much tighter in the small group market, so, congress has said that these questions about ten years ago, five years ago, you can't -- those don't matter. in the small group market. you are only allowed to apply --

an insured is only allowed to apply preexisting condition for something that was treated or diagnosed in the six month window prior to coverage taking effect and anything that happened before that, is not even allowed to be considered. and, if the person coming into the policy had prior group coverage, that gets credited against the pre-ex so that can not be considered either and so, it is mostly eligibility. and i -- >> i'm going to try to be real quick here, and i apologize for cutting you off. with regard to what needs to be done, in the event we don't get the major reform that y'all haven't talk about, anybody else is talking about, in the event it becomes something of trying to narrow a time window in which insurance companies have the right to review medical records, would it not be feasible that if we had electronic medical records, that that would

facilitate a more timely review? i would assume common sense would say it would. ms. pollitz do you see consumer protection groups would oppose making those kinds of personal medical records available for insurance companies, to ruin a timely fashion, so that we one -- would not, hopefully, have these situations to develop? >> they are already available for review. the -- >> we don't have the extent of electronic medical records that we all hope we will have. >> but, the privacy rules that you have in forced today, under hipaa say that medical under writing is a permissible reason for disclosure of medical records. >> you would see no reason anybody would raise that issue? >> it is already permitted under current law. >> last thing, and this is a -- more of a comments than anything else, the issue dr. burgess

discussed with you about those who are now being excluded because of preexisting conditions, et cetera. i think we all know that our high risk pools have not effectively operated, certainly are nonexistent in states like mine for example, i think we need to be looking at a policy where we would maybe take those funds that are available for high risk pools, some of which are not being utilized and put them into an environment in which we could perhaps with the sharing of some of those costs, bring these individuals into the pool. with the additional revenue, that would be available from federal sources, i simply suggest that is something we need to think about in my opinion, thank you, mr. chairman, i yield back. >> mr. burgess, do you want to question now or come back after votes? we only have five minutes and i have to told you tight. >> you know me, i can be really brief. >> i have never seen it yet, but go ahead if you want to try.

>> just ask you, all three of you briefly you, heard the discussion of the public option plan, what is your opinion of that? >> i oppose the public plan option. >> mr. collins? >> sir, i believe that the reforms proposed we can make the market work much better without a public plan. >> and mr. sassi? >> we also oppose a public plan, we also feel that -- >> i don't want to be the one to have to break it to you, but reality is you are very likely to get a public plan, you are not likely to get the deal struck by ahip and you can see the handled writing on the wall and i would urge you to be -- to think outside this box on this, for there are ways we can solve this problem. without going to a public plan, my opinion, and, without leaving so many people uninsured and without leaving so many people, that fall through the cracks as we heard this morning. clearly, the situation as it stands is unstable and untenable and cannot continue it. but, you guys have got to be

able to come to the table with some innovative thinking how we provide coverage to that segment of the population that is vulnerable and needs the coverage and don't need to turn the system on its head to cover the 10 tor 15% that is now left out, that is what we're going to do, if you don't help us with that. and, the fallback position, i promise you is a government run plan, and that is what you will get, if we don't work together, on this issue. so, i appreciate you all being here today, mr. chairman around appreciate the extra time and i will yield back. >> didn't have a question on this subject of today's hearing, okay. in all fairness, to will point there, i said, in my opening statement and if you care to comment, please do. i said in my opening statement, in the committee investigation, well point evaluated employee performance based in part on the amount of money the employees saved the company through retroactive rescissions of health insurance policies, according to documents obtained by committee, one well point official was awarded a perfect

score of 5 for exceptional performance based on having saved the company nearly $10 million, to -- through rescissions skigsz, do you care to comment on that, it fair to give you an opportunity to comment on that. >> thank you, during the process 0 clepging information requested by the committee we did uncover two performance appraisals from 2003 that were isolated to one area within california. that included one line each referring to retro savings, and a dollar and they were in the context of a part of the performance appraisal with other metrics, and they were part of a more comprehensive performance appraisal that was i think five to 7 pages long. and i reiterated my statement, well point does not have a policy, it's not our -- has not been our policy to systematically reward associates

for rescissions, tracking the number of rescissions or the dollar amount. >> didn't both of those employees receive bonuses, somewhere between 600 to about 6,000, i think the range was. >> my understanding is that those associates received within the average compensation that all well point acloefts received, for that given time period. >> okay, so, it is not the reviewers, all of your employees -- okay. with your profits i guess you could give bonuses. that concludes our hearing for today. the committee rules provide that members have ten days to submit additional questions for the record. and i've had the record books -- already been admitted submitted and we'll redact anything that is law enforcement sense tiff and that concludes our hearing and i thank all of our witnesses for coming and that concludes the subcommittee hearing. >> thank you.