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Questions About Golden Rule

Even as UnitedHealth Group (UNH) has helped shape the reform debate, some lawmakers have accused it of harming consumers. Several members of the House Energy & Commerce Committee chastised UnitedHealth during hearings on June 16 and July 27 for the conduct of its Golden Rule Insurance subsidiary.

Acquired by UnitedHealth in 2003, Golden Rule has sold individual and family policies for more than 60 years. State regulators have repeatedly fined and disciplined Golden Rule for allegedly deceptive practices. In 2002 it resolved a nine-state investigation by paying $660,000, but it denied wrongdoing. Since taking over, UnitedHealth has let Golden Rule continue one of its most controversial methods: selling individual policies through a nonprofit group. This gives some buyers the misimpression they are getting group coverage and better value, regulators allege. But states have only rarely taken formal action.

House members scolded Golden Rule and other insurers for allegedly rescinding coverage entirely after sick policyholders make credible claims. Richard Collins, Golden Rule's CEO, defended such cancellations, prompting Representative John Dingell (D-Mich.) to say: "This is precisely why we need a public option [to compete with private insurers]."

Collins responded that rescissions, used sparingly, root out fraud by dishonest consumers. That's only fair, he added, to families who play by the rules.
Terhune is a senior writer for BusinessWeek based in Florida.
Epstein is a correspondent in BusinessWeek's Washington bureau.

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