CA governor vetoes bill banning some health policy cancellations

After years of controversy, in which the California's Department of Managed Health Care has struggled to stop health plans from retroactively canceling policies, Gov. Arnold Schwarzenegger (R) has vetoed a bill cracking down on this practice. This comes after the DMHC imposed multiple million-dollar fines on insurers that have canceled individual policies inappropriately, most recently in a $13 million settlement detail with Anthem Blue Cross and Blue Shield that forced the plan to reinstate thousands of people who had lost their coverage.

The new bill would have created an independent review process to examine each case of "rescission," as these cancellations are known. Under this new system, policies could be rescinded only if the health plans could prove consumers deliberately misrepresented the state of their health on their application.

Schwarzenegger said he vetoed the bill because it didn't include certain consumer protections and would benefit attorneys who wrote it. The governor wanted six other protections included in the text, including a rule demanding that insurers continue coverage for family members of someone whose policy had been dropped. However, a provision offering just this protection is included in a separate bill that the governor has already approved.

To learn more about the bill:
- read this Associated Press piece

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