The individual insurance system is "fundamentally flawed," the House Energy and Commerce Oversight and Investigations Subcommittee said Tuesday. In a hearing which featured individual policy holders who lost their coverage when they became ill, lawmakers railed against the insurance industry. However, insurance companies defended the practice, stating it is necessary as a tool against insurance fraud.
In his opening statement, panel chairman Bart Stupak, D-Mich., accused Blue Cross of California of encouraging its employees to cancel the health insurance policies of individuals with illnesses like leukemia, breast cancer, and other expensive, long term cases.
Stupak drew attention to documents that show Blue Cross supposedly giving incentive to employees who cancelled the health insurance of the patients expected to cost the company the most.
"When times are good, the insurance company is happy to sign you up and take your money in the form of premiums," Stupak said. "But when times are bad, and you are afflicted with cancer or some other life-threatening disease, it is supposed to honor its commitments and stand by you in your time of need.
"Instead, some insurance companies use a technicality to justify breaking its promise, at a time when most patients are too weak to fight back," he added.
California Democrat Henry Waxman also slammed the system, calling it "shocking" and "inexcusable."
Lawmakers heard testimony from Illinois resident Peggy M. Raddatz, who told the story of her brother's insurance cancellation in the face of cancer after the discovery of pre-existing conditions, including gallstones and an aneurysm. However, Raddatz's brother was never informed of those conditions, and lost his insurance just before he was to receive treatment through a stem cell transplant for his lymphoma.
Although he eventually got the insurance back after a legal battle involving the Illinois Attorney General's office, most aren't so lucky.
"When you have cancer or you're in a position where your life is shortened to a matter of months, you can't go through the court system, because you don't have time to do that," Raddatz said.
However insurance companies present at the hearing defended their policies. Assurant Inc. (AZ), Wellpoint Inc. (WLP) and UnitedHealth Group Inc. (UNH) defended their practices.
President and CEO of Assurant Health, Don Hamm, said that rescinding insurance is very rare and happens only with 0.5 percent of policyholders.
"It is one of many protections supporting the affordability and viability of individual health insurance in the United States under our current system," he said.
When recession is necessary it is done to protect the larger insurance pool, Wellpoint executive Brian A. Sassi told lawmakers. Specifically he argued that it is limited to withholding information, like the Raddatz claim.
"If we fail to address fraud and material representation, the cost of coverage would increase, making coverage less affordable for existing and future policyholders," Sassi said.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.