Rep. Henry Waxman, D-CA, chairs a House Oversight and Government Reform Committee hearing on the compensation mortgage company CEOs receive on Capitol Hill in Washington on March 7, 2008. This hearing is part of Congress' ongoing examination of the subprime mortgage crises. (UPI Photo/Roger L. Wollenberg)

House Oversight and Government Reform Committee Chairman Rep. Henry Waxman, D-Calif., said moves to expand the individual insurance market require greater scrutiny, especially insurers' cancellation practices, the Los Angeles Times reported Friday.

About 14 million Americans pay for medical benefits on their own.

Waxman noted Thursday one case in which he said a consumer lost coverage because he didn't disclose headaches on his application.

He "was terminated because the insurer said he should have known that occasional headaches would later be diagnosed as multiple sclerosis," Waxman said.

"I understand that insurance companies need to protect themselves from fraud," Waxman said. "But that is not what happened ... (in states) across the country. Insurers are using technicalities or trumped-up 'misrepresentations' to rescind policies after individuals get sick and accumulate hundreds of thousands of dollars in medical bills."

Stephanie Kanwit, a lawyer for America's Health Insurance Plans, told the committee rescinding coverage is rarely used but necessary to ensure that people who lie about medical conditions don't contaminate the risk pool for honest consumers, resulting in higher prices.