The policies were individually purchased plans in which policy holders had become pregnant or sick, apparently triggering Blue Cross to rescind the policy. Adding insult to injury, the policies were cancelled retroactively—leaving individuals, hospitals and doctors holding the bag for care already provided. According to California law, policies can only be rescinded if the applicant lies on the application to conceal pre-existing conditions.
Individuals pay exorbitant premiums for coverage purchased outside of employer group plans, and are also more vulnerable to such cancellations in California law. But this is bad news for everyone, not just those who have to buy individual plans. Who pays when hospitals and doctors aren't reimbursed? The taxpayers do-- one way or the other. Taxpayers also paid for the state's investigation, whose end result is a piddly $1 million suit against Blue Cross, whose annual profit is more than three times that. Blue Cross policy holders funded an entire division of the company that is devoted to finding reasons to cancel the policies of sick or pregnant people.
About 6.5 million California residents, or about 18 percent of the population, lack health insurance.
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