President Obama and Congressional Democrats have a standard talking point when defending Obamacare these days: no longer can insurance companies cancel your insurance after you get sick. They are lucky they are not subject to the same FTC regulations that apply to commercial businesses. This practice has been illegal under federal law since the presidency of Bill Clinton, and it has been illegal in most states long before that.

There is one tweak in the ACA that pertains here. In the past, if an applicant gave false information when applying for insurance, the insurer could later cancel the insurance and refuse to pay medical bills. These are called “rescissions.” How often did this happen? Industry sources report that it happened in about ½ of 1% of all polices. See Austin Frakt’s summary. Under the new law, the misrepresentation has to be “intentional.” “Is this a big deal?” asks Frakt. Probably not.

But here is what is a big deal, even though Austin ignores it: The president is using the problems of a tiny fraction of the population to justify draconian regulation of the health insurance of everyone in America! That’s outrageous. The change in the ACA pertaining to rescissions required a one-line piece of legislation. The bill we are living with is 2,700 pages long.

[Cross-posted at John Goodman’s Health Policy Blog]

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For the pivotal alternative to Obamacare, please see the Independent Institute’s widely acclaimed book: Priceless: Curing the Healthcare Crisis, by John C. Goodman.

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