Los Angeles Times Looks at Health Insurance ‘Scams’
The Los Angeles Times on Monday examined an increase in health insurance "scams that hook victims with glossy brochures and low rates." Health insurance scams "tend to proliferate during periods when medical costs are soaring, as they are today, and the economy is sluggish," and the "hardest hit" generally are people with low to moderate incomes, the Times reports (Costello, Los Angeles Times, 3/22). According to a General Accounting Office report released earlier this month, health insurance scams in which unauthorized entities collect premiums from consumers but do not pay claims have increased in recent years. The report found that between 2000 and 2002, 144 unauthorized entities sold health insurance to 15,000 employers -- which accounted for more than 200,000 policyholders -- and that the number of such entities newly identified by federal and state officials increased from 31 in 2000 to 60 in 2002. The report found that more than 25% of unauthorized entities sold health insurance through associations of employers or individuals, with a focus on small businesses and self-employed workers (American Health Line, 3/16). According to the GAO report, state regulators have taken action against only 14 of the 144 companies suspected of selling unlicensed plans, and few individuals or companies allegedly involved in scams will face civil or criminal charges. Further, even if a company faces legal action, often the company lacks the funds to reimburse for unpaid medical claims and policyholders are left to pay the charges, the Times reports (Los Angeles Times, 3/22).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.