populations regardless of claims history and all populations regardless of economic status what mr. hamm, why don't you go first and we will go down the road. >> i'm having a little difficulty following the question, sir. if i may understand specifically what you're asking. >> regardless what we do with individual or business mandate, an employer mandate maybe we don't do a mandate at all, but you have within your power designed product so that all populations regardless of claims history could be covered would you be willing to do that? >> in the current system that wouldn't be feasible. we need an environment where all americans required to participate before we could get those assurances. >> so you would not be willing to alter business practices if there was a way to do that to provide coverage for a greater segment of the population even

with claims history? >> if the reforms proposed by hipaa are adopted we would be glad to participate in the system but it is necessary that all -- pettis paid when they say a system where people choose we need to have the process of assessing risk at the time of the application. >> with respect reforms are not going to happen. you are going to get a plan as your chairman this morning. mr. collins, can you answer briefly would you be willing to design such a project? >> but i would respectfully have to agree with mr. hamm a guaranteed issue product that would fit all people and affordable prices is economically practically impossible. but i would suggest is hipaa also create alternative coverage mechanisms for each and every state so each state is supposed to have higher risk or alternative coverage mechanism and these high risk pools have been underfunded some of the things that could be done right

now today is to increase the amount of funding going into the high-risk pools so that people that have those series of issues otherwise uninsurable on the individual market have a place to go that is affordable and affords them the care that they need. >> on the issue of high risk pools i think the private sector is going to be required to make the contribution to that as well and that in the private-sector with citigroup insurance for individual markets there must be a product that is available to everyone regardless of their claims history. yes they may require federal subsidy and state subsidy and guess the private sector may have to bring some to the table as well. mr. sassi -- >> last question mr. burgess, you are going on. >> regardless of claims history in the population would she be willing to make a product available? >> i have to agree with my colleagues in the current voluntary individual market, we couldn't 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 enforceable personal coverage mandate and unfortunately that has resulted in significant cost increases that have to be borne by others in the individual markets so the answer would be no. >> mr. chairman, you've been generous with your time. again, i will stress this is going to take creative thinking now sidewalks. i don't think you're going to get what you want in the proposal. you're going to get something like the chairman now live at the beginning and i would urge you to think creatively about this because this is the difficulty that leads us where we are today and i can't help you -- >> questions and speeches are over. >> i cannot help you if you are not willing to move. thank you. >> it is not my plan mr. chairman i would argue with you

now, that's for another hearing. we are going to have votes in a each of you provided to the committee information relates to certain medical conditions that automatically triggers investigation in a possible ground recision. mr. sassi you had conditions that automatically triggers investigation. mr. hamm on behalf of assurance there are 2,000 trigger investigations provided these include breast cancer, ovarian cancer and brain cancer. why does cancer trigger investigation? >> what triggers the investigation -- >> why does cancer a trigger? >> why cancer triggers investigation are the types of medical conditions of chronic nature where there's a high probability that the condition would have a pre-existing that time the application. it isn't based on the cost of the claim. it's based on the medical

condition and in fact the people that make the decision decision are not aware of the cost of claim. it's all about -- >> if it's the medical conditions did before you sign them up why don't you get all the medical records? why don't you find it then? why don't you wait until there is a claim? >> if we were to receive all the medical records of the time of application that would delay the process significantly delay in people's access and have a tremendous amount of cost to the product. the majority of applicants provide all the information asked for a time of the application. >> so it's a cost issue. two costly to get the medical record. >> it would add to the premiums the customers would pay by a significant amount. >> does it cost $40 to get medical records? >> i am not familiar but it would deily the process. >> but is it went to be better to delay the process to make sure a person is injured as opposed to when they are going for cancer like mr. raddatz? >> the vast majority of

customers provide appropriate information. >> said mr. raddatz by you delight him coverage, it? >> unfortunately i cannot comment on that particular case. >> mr. collins, asking the same question you insisted you also music computer ice system to identify cases to automatically investigate for possible rescissions but there is no one at your company who knew how the computer decides which files should be reviewed so, is it the case united has put the decision of which patient will have the health care treatment interrupted by recession investigation in the hand of the computer that no one understands? >> no, sir, that is not true. i haven't been produced 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 but let me just say -- >> can you say what conditions

the computer considers for a possible investigation? >> no single factor is used to trigger an investigation so we look at the system looks as its screening claims that come in at the effective date of the policy, effective date of the procedure, severity, type of service and diagnose code, those are all factors that go into the algorithm -- >> the algorithm no one from the company could tell what you commit to produce whatever the witnesses or documents are necessary to explain your algorithm, computer selection process, could you do that? >> yes, sir -- we are trying to put it in a format that would be acceptable to the committee. >> dr., professor pollitz do you see a common threat? heat got 1400 conditions, 2000 conditions in the computer that it can't explain. why do you think they have all these rescissions?

>> i think the common thread is that if somebody makes a claim for anything serious in the first year there is an opportunity to go back to review the entire transaction to see if it's going to be withdrawn. i think that is just the common transaction and i think it is not consistent with your federal law and what ever else you may do going forward -- >> as to the hipaa law leave it to the states and hipaa has to be enforced by the federal government cns, correct? >> that is correct. -- of the value of the lot depends on the enforcement of the law? >> yes it does and if there is a fine of $100 per day per affected individual for noncompliance with the law. >> let me ask each of the ceos this would you commit that your company would never rescind another policy unless there was

intentional fraudulent misrepresentation in the application? >> i would not commit to that. >> how about you, mr. collins, would you commit to not rescind unless there is intentional fraudulent misrepresentation? >> no sir, we follow the state laws and regulations and we would not stipulate to that. that's not consistent with each state. >> how about you, mr. sassi, can you commit that you will not rescind thomas there is intentional fraudulent misrepresentation? >> i cannot, the law of the land and the majority of states. semidey think it is fair to recent somebody for an innocent mistake? >> i think that playing the knowing standard is much more objective and -- >> on the first panel no one had the knowledge and they were all rescinded -- >> i'm sorry? >> on the first panel no one had a misrepresentation but they had their policies rescinded from ms. beaton all the way down to the witnesses not material misrepresentations. >> we are to determine the

applicant didn't know about a specific condition we would not rescind. >> okay. ..

they were being treated for acne? does not 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 so that would no longer be needed. >> well, i haven't heard your opening statement. i glanced at them and nyet not heard the first round of questions. we understand the need to verify that people are telling the truth. we are not asking you guys or the insurance industry to automatically take somebody's word for it. i understand that. but, when i see advertisement at fur advertisement about, be a part of the family and we treelike our own family, and

then somebody that doesn't have group coverage that takes out an individual policy and runs into some situation where they have a healthcare issue that requires a major claim early in the policy, if they operated in good faith in taking out the policy and you approved of them, i really don't think it is good business practice to go back and try to figure out a way to rescind that policy. if nothing else, it is a false trade act, of falls trade practice truth in advertising. and, one of the duties of our constitution is a little thing called federal preemption. we have the authority on this committee to preempt state law if it is an interstate commerce and we can't preempts state law in intrastate commerce but we

can in interstate commerce, and i don't think there is one vote on this committee for the practice of retroactively reviewing its policy to try to rescinded if you have a woman like my constituents, ms. beaton, who discovers that she is that breast cancer or you have somebody who needs a stem cell transplant, or even the young lady from california who just needed some blood work done. i mean, we will back you up on fraud and misrepresentation but i don't think you are going to 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. it is just a statement, so if you would like to comment on that, i would certainly like to give you the opportunity to do

it. >> no one cares to insert? >> 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 am going to yield back. >> could i follow up on that? if it is material to the representation, let me ask you this. in your policy mr. hamm, and it is question number 14 on your questionnaire. your enrollment questionnaire. now tell me how you get a misrepresentation. within the last ten years, because you say you are insurance health enrollment questionnaires are simple, easy to understand, straightforward language so people can

accurately report their medical history so, your question says within the last ten years as any proposed insured@@@@@@@@@ @ @ @) what these words mean if you don't know and i don't know? >> sir i believe that is an application that is not currently used at this time. >> it is last year's application

last year's application and, last year's application. have you change the application from last year? >> i am sorry sir. >> this is last year's application for goode did you change it in the last year? >> i am not aware if we have chains that the application. >> so as far as you know that is your current application. >> i believe our current application asks questions back to five years of the ten year might be different in mogadishu today. >> it is the same question, dia do you don't know what it is. >> i do not know what that is. >> mr. deal. >> mr. barton i took your time. >> if this is the hypothetical but i just 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 those medications for the rest of my life.

i am covered under a group plan, blue cross/blue shield of texas and it is available to every federal employee who lives in texas and mike coverage has been good. i have never had a problem. but let's say i quit the congress, and i going to business for myself and i try to get a private health plan like ms. beaton 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 am taking, the fact that i had a heart attack, give the doctor that time, the location, but i broke my leg playing football in high school. i got a 250 lb-- i with a linebacker. if i forget to put all my application with your companies that i had my, this 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 resent my claim, my policy later on? under your policies right now that your company has issued? >> i admit that my big problem, tell you the medications, all the stuff but i flat forget that i broke my leg and was treated by dr., paid by the school district in 1967. >> congressmen barton, r underwriting guidelines really kind of dictate that. but it is my understanding of

how are underwriting guidelines work is that since that condition would not be material and are underwriting decision because it happened so far in the past and was a non-serious nature that that would not have factored in to the underwriting. >> i understand you might not cover me because of my heart attack. i understand that, it would be totally within your company's right to say congressman barton had a heart attack in 2004 or 2005 and therefore we can issue him a policy. i understand that. my question is about my leg injury from way back when, at i don't disclose that does that disqualify me potentially on down the road? mr. collins? >> sir, the application is looking for information billington years back. >> so that without the material? >> mr. hamm? >> the same answer is mr. collins. >> thank you mr. chairman. >> mr. deal for questions please. >> thank you mr. chairman. we are talking in the private

insurance company and mr. sessions said that this summer in the 50 million ranch, is that correct? to you three gentlemen to you also have policies that extend to erisa tutt coverage plans? dewalt three view-- >> wellpoint insurers one in nine americans. the beth majority are covered under erisa plans. >> mr. collins. >> yes sir, the majority of our membership are in group insurance plans which are covered under erisa. >> mr. him. >> the majority are individuals however we have some customers under erisa. >> does the same problem retained in the rest of the marketplace as in this private insurance marketplace, ms. pollitz you indicated that you think it does. >> there is recision-- >> i am sorry, i can't hear you. >> there is recision in the small group market. it operates a little differently

because it is a guaranteed but a similar process, if they claim is submitted during the week period, it is largely the eligibility of the members of the group and the family members of the group that will be reinvestigated to see if there is any way that the people who made the claim should have been on the policy in the first place. >> but the state period is like two years, do not apply because it is the nearest the plan? >> your are much tighter in the small group market so congress has said that these questions about ten years ago, five years ago, those don't matter in the small group market. you are only allowed to apply and insurers are only allowed to apply preexisting conditions for something that was treated or died nest in the six month window prior to cover its stake in effect so anything that happened before that isn't even allowed to be considered and

that the person coming into the policy had prior group coverage that gives credited against the pretext so that cannot be considered either so it is mostly eligibility. >> i am 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 you will have been talking about and anybody else was 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 have electronic medical records, that that would facilitate a more timely review? i would assume common sense would say that it would. ms. pollitz do you first see that consumer protection groups would oppose making those kinds

of personal medical records available for insurance companies to review in a timely fashion, so that we would not hopefully have these situations develop? >> they are already available for review. >> we don't have the extent of electronic medical records that we all hope we will have. >> but the privacy rules you have been forced to the under hipaa say that medical underwriting is permissible reason for disclosure of medical records. >> you would see no reason to raise that issue? it is already permitted under current law. >> the last thing in this is more of a comment than anything else. i think the issue that dr. burgess discussed with you about those who are now being excluded because of preexisting conditions etc., i think we all know that are high risk pools that have not effectively operated answered by another assisted 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 with them into an environment in which we could perhaps with the sharing of some of those costs with the insurance industry bring these individuals into the pool with the additional revenue that would be available for available sources. i just simply suggest that is something we all need to think about in thank you mr. chairman. i yield back. >> mr. burgess do you want to question now or do you want to come back? you only have five minutes so i wi have to hold you tight. >> i can be very brief. >> i have not seen it yet but go ahead. >> we have 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 the reforms

that have been proposed we can make the market work much better without a public plan. >> mr. sassi? >> we also oppose the public plan. >> i don't want to be the one to have to break this to you but the reality is you are very likely to get a public plan and not likely to get a deal struck by a hip at the white house. i would urge you to think outside the box on this when there are ways that we can solve this problem without going to a public plan, in my opinion and without leaving so many people uninsured inlet bell leaving so many people that fall to the cracks. clearly the situation as it stands now is unstable and untenable and we cannot continue it but you guys of that to be able succumb to the table with some innovative thinking on how we provide coverage to that segment of the population that is full mobile. we don't need to turn the whole system on its head is to cover that ten of 15% that is right now left out but that is what we

are going to do if you don't help us with this and a fallback position i promise you is a government-run plan and that is what you are going to get if we don't work together on this issue so i appreciate you being here today and mr. chairman i appreciate the extra time and i yield back. >> so you didn't have a question on today's hearing? in all fairness to wellpoint, i said in my opening statement and a key care to comment please do. i said in my opening statement in the committee investigation wellpoint appelee wedded employee performance based in part on the amount of money and its employees say the company through what corrective rescissions of health insurance policies. according to documents obtained by committee one official was awarded a five for exceptional performance based on having said the company nearly $10 million the recisions bill goody you care to comment on that? i figured is there to give you an opportunity to comment. >> during the process of collecting information requested

by this committee we didn't cover the two performance appraisals from 2003 that were isolated to one area within california. that included one line each referring to which the savings in a dollar amount. they were in the context of a part of the performance appraisal with other metric and they were part of a more comprehensive performance appraisal that was i think five to seven pages long. i reiterate my statement that wellpoint does not have a policy. it is not been our policy to systematically reward associates for performing rescissions, for tracking the number of rescission or the dollar amount. >> begin both of those employees receive 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 wellpoint associates received for that given time period. >> oh keizo ury juris-- okay. with their profits i guess you would give bonuses. that concludes our hearing for today. the committee rules provide members of ten days to submit additional questions for the record. i have already had the record book submitted for the record. we will redact with anything that relates to law enforcement said that. that concludes our hearing. i thank gore witnesses for coming and that concludes this subcommittee hearing. >> thank you.