Grim news regarding California's top insurer, which set financial goals and bonuses based on money saved from dropping individual policyholders.

The LA Times reports that Health Net, Inc. avoided paying over $35 million in medical expenses by rescinding roughly 1,600 policies between 2000 and 2006. Documents disclosed on Thursday, November 8 also revealed that Health Net paid its senior analyst $20,000 in bonuses, which were tied to her meeting or exceeding annual goals for policy revocation.

The information regarding bonuses was uncovered in an arbitration hearing brought by Patsy Bates, a hairdresser whose coverage was rescinded in the middle of chemo treatments for breast cancer. (Bates is suing for $6 million in compensation, plus damages.

Big stories like this aren't good for the health insurance industry, especially in an election year. If Americans can't trust private health insurers to look after their well-being, they're going to gravitate to other alternatives, such as the universal health care some presidential candidates are encouraging.

What's the solution? How do you as an agent quell the fears of individuals who are on the fence about private health insurance?

[via]