Health insurance companies claim that they rescind, or retroactivly cancel, individual health insurance policies only .5% of the time. While 1/2 of one percent seems to be a small number, it is really stunningly huge.
As the linked article "Unconscionable Math" states, http://tauntermedia.com/... your chances of recision go up to 50% if you come down with an illness that is expensive to treat. That's right--you have a 50 percent chance of losing your policy if you are very sick.
There are lies, damn lies and statistics. You should read the entire article but here's the money portion on how .5% recission rate of all insured becomes 50% recision rate for the very sick:
Half of the insured population uses virtually no health care at all. The 80th percentile uses only $3,000 (2002 dollars, adjust a bit up for today). You have to hit the 95th percentile to get anywhere interesting, and even there you have only $11,487 in costs. It’s the 99th percentile, the people with over $35,000 of medical costs, who represent fully 22% of the entire nation’s medical costs. These people have chronic, expensive conditions. They are, to use a technical term, sick.
An individual adult insurance plan is roughly $7,000 (varies dramatically by age and somewhat by sex and location).
It should be fairly clear that the people who do not file insurance claims do not face rescission. The insurance companies will happily deposit their checks. Indeed, even for someone in the 95th percentile, it doesn’t make a lot of sense for the insurance company to take the nuclear option of blowing up the policy. $11,487 in claims is less than two years’ premium; less than one if the individual has family coverage in the $12,000 price range. But that top one percent, the folks responsible for more than $35,000 of costs – sometimes far, far more – well there, ladies and gentlemen, is where the money comes in. Once an insurance company knows that Sally has breast cancer, it has already seen the goat; it knows it wants nothing to do with Sally.
If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population). If you take the LA Times estimate that $300mm was saved by abrogating 20,000 policies in California ($15,000/policy), you are somewhere in the 15% zone, depending on the convexity of the top section of population. If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%, the folks with over $35,000 of annual claims who could never be profitable for the carrier – then the probability of having your policy torn up given a massively expensive condition is pushing 50%. One in two. You have three times better odds playing Russian Roulette.
That's right. You have a 50% chance of having your policy recinded if you are very sick. Our health insurance industry will gladly cash your check every month, but if you ever really need them, you have a 50% chance of being kicked to the curb. Its stunning what crooks we have in charge of providing healthcare.
At a minimum, insurance companies cannot be allowed throw people off the rolls for supposedly undisclosed pre-existing conditions. It should be a crime.