accuracy. >> how would each of you improve that application process? it seems to me that that's the crux of the argument here. there are thing that is you didn't know oh throw are things that you didn't know that were on your loved one record that is they didn't know. how can you claim knowledge of something you have no knowledge of. that, to me is one point here. and then the second@@@@@@@@@ @

loved ones aren't rescinded from coverage and, yet, find this balance? it seems to get back to the initial application process and the review of those applications and a better understanding for those of us who may be signing up for that type of health insurance 37 i'm curious, how would you fix at least that part of the process? >> anyone want to tackle that? >> i would just state that the insurance company at the time you apply for insurance, and you disclose your doctors, they have -- they should be the one that is have to do the investigations. if they don't do the proper investigation at the time you apply they shouldn't have the right to go back years later. oh three's two years -- there's a two year window for insurance companies by which they can do their investigations. no. that's wrong.

they should have to investigate before they give you your insurance. they have all the opportunity to investigate then. you disclose your doctors. let them get the records. let them look at and comb the records at that time. why are they doing that later on. >> when you have a big claim? >> pardon me? >> absolutely. if that isn't intentional, what is? they want to save money and wait until you have claims before they spend the investigative money to do what they should do at the beginning. so all this time they haven't done their job. they're taking consumer's money and the consumer thinks, i'm insured. but i'm not insured. and that's not right. that law needs to be changed. >> ms. bait snn. >> i asked, could i have a physical. i wanted to have a physical for

insurance and they said, no, we don't do that. i even offered to let them do a physical which, to me, that would be a good thing this that way -- >> we have that in medicare. >> they don't do that at all because they don't want to spend the money for a physical to give it to you to rule you out then so you don't get your hopes up and think you have insurance. >> i completely agree. i just wanted to add. after this practice happens, which hopefully we're going to stop it from happening in the first place 37 but when your physicians write letters on your behalf and aid you in apeeling to these insurance companies the 235k9 that they give no weight whatsoever to what these physicians who have been treating you for years say, you for years say, it's unconscionable. >> they said the patient would have no idea of this. it's a note i put in a file i never shared with them. and that's -- that would -- that

doesn't seem right. would it be helpful -- and i realize i've run over my time here -- it seems like there's yes and no columns on these forms, given that i don't think any of you are physicians, would it be helpful if maybe there was an insurer, don't know column that you could check as well? which if i'm an insurer, there would be something that i would think, ah, i should look into it further. the insurers, if you read their testimony, they make the case that even though it's a small percentage, although it's a very painful percentage. small percentage. if we did everyone, it would slow down people getting access to insurance, blah, blah, blah. they're saying we go investigate those where we have cause or an issue. that's something we'll get into in the next panel. but, you know, there is this notion that it's a very small segment of the population, and

so, you know, to get people covered,. i heard many people who formerly work at insurance companies talk about these secret specific units that are designed to find errors or omissions or whatever you want to call them in people's records so that they can go back and save money. >> i think we actually get some of that testimony from our final witness from georgetown that says it may be a small percentage, but it's perhaps a big percentage of the claims cost. >> i'd just like to say, those are the people you know of. there are many people out there who lose their insurance and then go on medicaid, go on welfare, go without insurance. you're not aware of who those are. those are their numbers. those aren't the consumers' numbers. we don't really know how many people are out there. and you know what, i don't care

if there is just the three of us, that's too many. one too many who dies because an insurance company canceled their insurance is one too many. >> all right. any final comments? i just wondered if you had any final comment on that point. it's okay if you don't. >> i'm real hard of hearing. what did you say? >> i just wondered if you had any final comment. >> i just agree with what both of them said, and i know so many people in my cancer group that i wish could be here to talk to you that you wouldn't believe their stories. it's a common practice, and you'll never know how common it is, and when they hire nurses to investigate, their whole shift do nothing but review medical records looking for things to get rid of people. that just shows you right there. >> indeed. thank you very much. thank you, mr. chairman, for

your indulgence. >> thank you. let me just ask a question. we focused on what happened to you three, as we should, rightfully so, but we found close to 20,000 cases where there were rescisions in the last three years from insurance companies who will testify in the next panel. and there are even people like a spouse gets in a bicycle accident, has some fractured bones and then denied because her husband had back surgery. what bearing that had on that lady's fractures is beyond me. but that's what we're seeing. ms. beyton, one thing i want to ask you. in your testimony you stated, and i'm going to quote now, that you lived with fear every day with my insurance company. what are you afraid your insurance company might do? >> without a doubt, someday they'll cancel me. someday mr. barton won't be there to protect me. i'm young, and they'll find

something to get rid of me. somehow i won't have insurance. someday i'll be out of blue cross and blue shield's record. they'll find some way to get rid of me, and coming here today would just about do it. >> so if you lost insurance, you think you wouldn't get insurance from another company since you've been rejected once? >> if i lost insurance what? >> are you afraid you wouldn't be able to pick up another individual insurance company? >> i'm uninsurable. the only way i could do it is have a job and be part of a group. >> because of a preexisting condition? >> because i have cancer. once you have cancer, you're uninsurable forever. >> that will teach me to wear a light-colored suit. thank you, mr. chairman.

i wanted to express my appreciation for the witnesses coming here today. certainly none of us condone abuses within the system, and you pointed out some of those that appear to be in that category, and i know it took a great deal of effort on your part to come, and we appreciate your courage and we appreciate your time that you've devoted to it. i do not have any questions of you. i think your testimony speaks for itself. thank you, mr. chairman. >> well, that was pretty quick. any other -- greg? >> well, let me thank this panel for their testimony, their heartfelt testimony, and thank you for shedding some light on this. this is the face now like the callers

that impalla witnesses. in a second panel we have don hamm, executive officer of assurant self, mr. collins, owned by united health group. mr. brian sassi, am i saying that right? sassi who is the president and chief executive officer of wellpoint inc. and ms. karen pollitz who is the research professor georgetown university health policy institute. welcome to all of our witnesses. is the policy of the subcommittee to take your testimony under oath. please bid bison of the right and the rules of the house to be it buys the council during your testimony. kiewit to be represented by counsel during your testimony? mr. hamm you would? any time during the questions if

you want to get advice from counsel, just let us know and we will allow the. council cannot testify but the cannon fisa. mr. collins? mr. sassi? ms. pollitz? so then let me have you raise your right hand and take the oath. do you swear or affirm the testimony you are about to give is the truth, the whole truth and nothing but the truth in the matter pending before this committee? let the record reflect that the witnesses replied in the affirmative. they are now under the beginning with their opening statement. you have five minutes for an opening statement in you may submit a longer statement for inclusion in the record. mr. hamm if you don't mind will start with you, start from my left and go to the right. >> chairman stupack, congressman waldman, mears of the subcommittee i'm don hamm president and ceo of assurant health. welcome this opportunity to birds is a bait in the hearing today. is the dialogue like this that we can continue to address one of the most challenging issues

of our time, providing health insurance coverage for all americans. we appreciate that this subcommittee in congress are committed to finding the right place to address healthcare reform. if the system can be created where coverage is available to everyone and all americans required to participate, the process we are addressing today, recision, becomes the necessary because risk is shared among all. i passionately believe that all americans must have access to high-quality, affordable healthcare regardless of their income or their health status and i am proud to lead a great company that provides health coverage to individuals and families in 45 states. people need their products and we are proud to provide them to thousands of americans. individual medical insurance is affordable and belongs to each consumer and these uncertain economic times individual medical provides benefits to a growing population who do not

receive a employee sponsored health coverage. that is why individual medical is so important. we work hard to ensure our health questions are simple, easy and straightforward kurds medical history is necessary so we can fairly assess the health risks of each applicant. the vast majority people complete the enrollment form accurately. the underwriting process depends on misinformation and we rely upon the consumers disclosures. people applying for an individual insurance are given multiple opportunities to verify correct and complete the information they provide. they are given ten days to notify us of any inaccurate information or to reject the coverage. at assurant talf we are acutely aware of how our coverage affects people's lives. it is the responsibility we take very seriously. unfortunately there are times when we discover information that was not disclosed during the enrollment process. when this information is brought to our attention, we ask

additional questions to determine if the information would have been material to the underwriting risk we assume. ackeridge risk assessment keeps rates lower for all. assurant health this not want to rescind coverage. we are in fact in the business of providing healthcare coverage. we regret the necessity of even a single recision. the decision is never easy and that is why we follow a fair and thorough process that includes a number of careful review is. here is our system works. when we become aware of the condition that exists that prior to the application date and that information was not disclosed, a senior underwriter reduce the admitted information to determine if it was material to the underwriting decision. then the underwriting management verifies the analysis. fig mission was not material to the review is complete. if the omission was material the underwriter makes a recommendation to a review panel

which includes a least one physician. this review panel evaluates information and makes the decision. the amount of the potential claim is nev%r@@@@@@@@@@ @ @ necessary protections for affordability and viability of the individual health insurance in the united states. assurant hell supports the

principle that everyone in the united states deserts affordable healthcare and we see reform of the nation's healthcare system as a shared responsibility between doctors, consumers, health insurance and policymakers. the collectively can deliver effective solutions to provide coverage for all americans. that is why assurant health we will continue to participate in efforts to reform and improve healthcare in america. thank you. >> thank you mr. hamm. mr. collins, your opening statement please sir. >> good morning members of the subcommittee, thank you for inviting me to testify today. my name is richard collins, i and the ceo of golden rule insurance company. we are business that sells health insurance policies to individuals and their families. colgan roose the offering this at coverage for over 60 years. we seek to offer innovative and affordable products to meet the diverts healthcare and financial

needs of our customers. in our current healthcare delivery system, the individual insurance market operates primarily for families who do not have access to group insurance or government benefit programs. we have long advocated that our country needs comprehensive reform that includes modernizing our delivery system, tecla in the fundamental drivers of healthcare costs rath, strengthening employer-based coverage and providing well targeted support for low-income families. to be effective, to be effective we believe the modernization of the individual market these contain all of the following elements. first of all, individuals must be required to obtain or maintain health coverage so that everyone who participates in both the benefits and the cost of the system. second, ensure should be able to set rates within limited parameters of age, geography,

family size and benefit design just as they do in the group market. however i want to emphasize this point. rates should not carry on health status and coverage should be guaranteed, regardless of preexisting medical conditions for those that maintain continuous coverage. there, though and middle income families should receive some form of subsidy to ensure they have the same access to care as all americans for gofourth, insurers should be able to offer a wide spectrum of plan designed to allow american families the flexibility to choose a plan that fits their budget and lastly, the treatment of individual insurance premiums should be on par with employer coverage. until a comprehensive reform is a cheap we believe the medical underwriting of individual policies will continue being necessary. if these changes are instituted,

most of the reason for individual medical underwriting as well as most of the reasons for rescissions and terminations of policies would cease to exist. our company mission is to improve the health and well-being of all americans. in the individual market with accomplices by covering as many consumers as possible with quality health insurance. we also work to keep our products affordable to accomplish our mission because the primary barrier to access is affordability. we understand that we have a responsibility to treat all of our policyholders fairly and i assure you we take this responsibility very seriously. unfortunately for a variety of reasons some people choose not to purchase individual health insurance until they have a significant health the event. this decision not only has the financial impact on these families but raises the cost of healthcare for everyone. as you know the practice of precision has long been recognized by the laws of virtually every state.

precisionism common but unfortunate and a necessary recourse in the event of material in times of fraudulent misstatement or omission on an application. under our current reeves system failure to act on these cases is fundamentally unfair to those working families that play by the rules. because it severely, it would severely limit our ability to provide quality and affordable health insurance. inner riff and we determined it is necessary to rescind coverage and after a thorough investigation of the facts and compliance of state laws and regulations we follow practices and procedures designed to ensure fair processes for the individual. and as indicated, our use of recision is rare, less than one-half of 1% of individual insurance policies in 2008 were terminated or rescinded and in each case the effective customer

was afforded the right of appeal. in conclusion, we look forward to working with this committee, the congress, state and federal regulators to continue to expand access to affordable health coverage in the individual market. thank you. >> thank you. mr. sassi your opening statement please. >> thank you chairman stupak, ranking member wilbon and members of the committee for inviting me to testify before you today. i am brian sassi, president ceo of the consumer division of wellpoint. we understand the impact these decisions can have on individuals and families. we have put in place the theroux process with multiple steps to ensure that we are as there and accurate as we can be in making these difficult decisions. i want to emphasize that rescission is about stopping misrepresentation that contribute to the spiraling healthcare costs. by some estimates healthcare fraud in the u.s. exceeds

$100 billion, and now large enough to pay for covering nearly half the 47 million uninsured. recission as a tool employed by wellpoint and other health insurers to protect the vast majority of policyholders to provide accurate and complete information from subsidizing the cost of those who do not. the bottom line is rescission is about combatting caused her been by these issues. if we fail to address misrepresentation the cost of coverage would increase making coverage let's affordable for existing and future individual policyholders. i would like to put this issue in context. while most people the war ended the age of 65 obtain health insurance through their employers some 50 million americans purchase coverage in a voluntary market. in a market where individuals can choose to purchase insurance at any time health insurers must medically underwrite applicants or current health risks. if an individual buys healthcare which only when he receives no-- need healthcare services the system cannot be sustained.

well we appreciate that this is a critical personal issue individual market rescission impacts extremely small share of the individual market membership. and our experience we believe more than 99% of all applicants for individual coverage provide accurate and complete information. in fact as a percentage of new individual market in rome during 2008, we presented only one-tenth of 1% of individual policies that year. health-insurance surfaced in the media in 2006 and 2007 generating public concern about what you are talking about today. armoring point today is the same as it was then, the voluntary market for health insurance requires we protect their members from costs associated with fraud and material misrepresentations. otherwise the market cannot be sustained. in response to the public concern of the practice of rescissions in 2006 wellpoint

anew took a thorough review of our policies and procedures. following the review wellpoint with the first insurer to announce the establishment of a brady of robust consumer protections that ensure recisions are handled as accurately and appropriately as possible. these protections include one, reading application review committee, which is staffed by a physician that makes a decision decisions, to cup, establishing a single point of contact for members undergoing a recession investigation m3, establishing an appeal process for applicants to disagree with our regional determination, which includes a review by an application review committee not involved in the original decision and then in 2008, wellpoint was the first in the industry to offer a binding external independent third-party review process for rescissions. we have put all these protections in place with multiple stetz because the cover millions of americans and want to be as fair and accurate as we

can be. some have asserted that health insurers provided systematic reward for the employees regarding decisions. this is absolutely not the case that wellpoint. i want to assure the committee that there is no wellpoint policy to factor in the number of decisions or the dollar amount of unpaid claims and an evaluation of employee performance or in calculating the employee's salary or bonuses. in response to policymaker interest and in acting consumer protections related to rescission wellpoint is proposing a set of regulations with new consumer protections. i about lion decent my written testimony to the subcommittee. in addition the health insurance industry has proposed a set of comprehensive interrelated reforms to the individual health insurance market as a whole. the centerpiece of this proposal is the elimination of underwriting combined with an effective enforceable personal coverage requirements. in other words insurers sill to all applicants regardless of preexisting conditions as long

as everyone enters the risk pool by purchasing in maintaining coverage. this would render the practice of recission unnecessary. our proposals are examples of how we are working to find common ground on these issues so we can make quality affordable healthcare available to all americans. thank you for the opportunity to discuss this issue on our proposals with you and i look forward to your questions. >> thank you. ms. pollitz your opening statement please. >> thank you mr. chairman and members of the committee. i study private health insurance and its regulation of georgetown the. thank you for holding this hearing today on health insurance riches and. is a series issue but was importance and the problems explorative they can teaches broader lessons that will be important for healthcare reform. the individual market is a difficult one as we all know and because it is small and voluntary an vulnerable to adverse selection there has been a lot of resistance to enacting

a lot of incremental reforms to govern practices in the marketplace however with the enactment of hip but in 1996 the congress did that to apply when import rule broadly to all health-insurance including individual health insurance and that is the belove guaranteed renewability. prior to hipaa individuals and small employers to buy health insurance to make claims would sometimes have a covers canceled and hipaa sought to fix that by requiring and i quote except as provided in this section a health insurance issue with that provides individual health insurance coverage to an individual who shall renew or continue to enforce such coverage at the option of the individual. only narrow exceptions to guarantee ernabel dear permitted gambit prospective policyholders behavior the policy can only be renewed or discontinued, can be renewed or discontinued only of individual moves out of the service area fails to pay their premiums or commits fraud. congress relies on state to adopt and enforce hipaa protections and the federal government is supposed to direct

wind force when states do not. red states implemented hipaa they adopted the renewability rule but other conflicting provisions in state law remained unchanged. in particular laws governing so-called contest ability. continue to permit insurers to engage in's claims underwriting and present policies or deny claims based on reasons other than fraud and failure to pay premiums for the state was create a window usually two years, when claims made under policy can be invested to determine whether they may be for a preexisting condition. after that period a policy can be rescinded or claim denied only on the basis of fraud but during the window, if they claim submitted by a new policyholder the original application for coverage is reinvestigated and if any even unintentional material misstatement or a mission is discovered consumers may lose their health insurance. that conflicts with hipaa. clearly when it comes to's claims underwriting protection against fraud it is important

but there's evidence some insurance companies are not nearly as careful as they should be in their initial medical underwriting and relying instead on's claims underwriting to catch their mistakes later. applications for coverage may ask broad, vague and confusing questions use technical terms that make it very difficult for consumers to answer accurately and completely. or, policies that, other follow-up that should occur in the initial underwriting may not. for example, if a 62-year-old submits an application indicating absolutely no health problems or health histories, that the application may be considered in coverage issued without further investigation at the time of application. market competition and profitability create pressures on medical underwriters to do their jobs more quickly and cheaply. however if medical underwriting is allowed in health insurance, it has to be completed up front before coverage is issued