On Wednesday, the House Energy and Commerce Committee approved Rep. Joe Barton’s (R-TX) amendment to prevent insurance companies from rescinding coverage for sick Americans. In an attempt to regulate the individual insurance market — which is currently regulated by the states — the amendment protects “insured people seeking treatment for a serious illness from losing coverage because they accidentally fail to reveal a prior unrelated condition.”

Indeed, Barton’s amendment is an important step towards enacting consumer protections that shield individuals from industry abuses.

Just last month, Anthem Blue Cross and Blue Shield agreed “to pay a total of $13 million in fines and to offer new health coverage to more than 2,200 Californians the companies dropped after they became ill.” More recently, Health Net Inc. reached a settlement with the California Department of Insurance, agreeing “to offer new coverage to 926 customers who were dropped from individual or family policies in the years since 2004.”

Across the country, 29 states and the District of Columbia have no state requirements “that insurers complete all medical underwriting and resolve all questions at the time of application” and 13 states do not require “insurers to notify policyholders in advance about what conditions will not be covered.”

Despite much needed consumer protections, however, the American Health Insurance Plans — an insurance industry front group — is trying to maintain the status quo. On Tuesday, President Karen Ignagni wrote to Barton “asking him to delay action on the amendment, adding that AHIP had developed its own proposal that allows insurance companies to rescind coverage only if patients withheld information ‘that should have been included in a complete and accurate response.’”

But delaying action is no solution at all. Ignagni’s suggestion that families strained by denied claims wait longer for relief, in this economy, ignores the growing pains of the middle class and does nothing to reform a system that regularly places Americans into economic turmoil.

Despite analysis and critique to the contrary, the McCain campaign has consistantly argued that exposing workers health benefits to income taxes would have no effect on employer-based coverage:

- Health Policy Adviser Jay Khosla: Employers will continue to deduct health care costs as they do now and hence will have the incentive to provide coverage as a benefit in a competitive workforce market and the employees of course can use their tax credits to maintain their current coverage.

- Senior Adviser Douglas Holtz-Eakin: This is actually not a plan that relies on the individual market, it relies on the traditional source of health insurance, which is employers.

- Senior Adviser Carly Fiorina: John McCain’s plan builds on the current system and allows for greater choices for American families that more uniquely fit their needs, including allowing families to keep their existing coverage.

But employers beg to differ. According to a survey of 187 benefits officers at large U.S. companies, “respondents clearly rejected the assertion that
altering the tax exclusion for employer provided health coverage would not affect employer sponsorship of plans”:

- 74 percent: say that a repeal of the employee tax exclusion for employer-sponsored health coverage (a proposal of Republican Presidential Candidate John McCain) would have a strong negative impact on their workforce.

- 59 percent: responded that their companies would offer a new plan option with less generous benefits.

- 4 percent: said the current tax treatment for workers is of “little or no importance” in continuing employer provided coverage.

UPDATE: The Health Policy and Communication Blog has more on the “value of employer provided health benefits.”