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Can Health Insurers Refuse to Renew a Policy?

Dr. Merrill Matthews, Executive Director, Council for Affordable Health Insurance

One of President Obama's recently proposed "Health Insurance Consumer Protections" is "Guaranteed Insurance Renewal," which requires insurance companies to "renew any policy as long as the policyholder pays their premiums in full."  

We agree that's an important issue. What the president hasn't explained -- and maybe neither he nor his advisors are aware of it (which would be a real cause for concern) -- is why he thinks the public needs this "consumer protection" since guaranteed renewability has been the law of the land for 13 years.  

In the Health Insurance Portability and Accountability Act (HIPAA) of 1996 it says with regard to the "individual" (i.e., non-group) health insurance market:   In General -- Except as provided in this section, a health insurance issuer that provides individual health insurance coverage to an individual shall renew or continue in force such coverage at the option of the individual.

And of the small and large group market, HIPAA says:   In General -- Except as provided in this section, if a health insurance issuer offers health insurance coverage in the small or large group market in connection with a group health plan, the issuer must renew or continue in force such coverage at the option of the plan sponsor of the plan.

As noted above, there are some exceptions. Non- payment of premiums is one. Fraud is another. And occasionally an insurer will cancel its whole block of business, perhaps because it's getting out of the health insurance line but more often because a state has passed such onerous restrictions that the company feels it can no longer do business in the state. In that case, everyone is dropped, not just one person. And an insurer can cancel a specific plan provided it offers a replacement plan.  

But as a general principle, health insurers must renew policies if an insured person or group wants to do so. So why has the president included guaranteed renewability in his list of consumer protections?   If he thinks the law has some loopholes, he needs to explain what those are and suggest ways to fix them.

But, as seems more likely, if neither the president nor his staff is even aware that guaranteed renewability is federal law, well, maybe these aren't the best people to be attacking health insurers and radically restructuring the whole health care system.  

-- Dr. Merrill Matthews, Executive Director, Council for Affordable Health Insurance