Senate Committee Holds Hearing on Increase in Health Insurance ‘Scams’
Witnesses at a Senate Finance Committee hearing on Wednesday discussed ways to reduce the "growing problem of health insurance scams," including the possible effect of association health plans on such scams, Congress Daily reports (Rovner, Congress Daily, 3/4). According to a General Accounting Office report sent to Congress on Tuesday, 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 (California Healthline, 3/3). Assistant Labor Secretary Ann Combs said that a bill currently under consideration that would permit AHPs could help prevent health insurance scams by giving small businesses "an alternative source of secure health insurance coverage." The bill, which the House has approved and is expected to go before the Senate for a vote later this year, would allow small businesses to align to buy health insurance without being subject to state regulation. Senate Minority Leader Tom Daschle (D-S.D.) said that opposition to the bill stemmed from governors and state insurance commissioners, adding that he opposed provisions in the bill that would give AHPs "new exemptions from state oversights," CongressDaily reports. In addition, Texas Insurance Commissioner Jose Montemayor said that giving the Labor Department more authority to act against illegal plans and that allowing federal investigators to testify at state proceedings would reduce health insurance scams. Mila Kofman, assistant researcher at Georgetown University, testified that the Justice Department needed to increase its number of health insurance fraud prosecutions because "civil actions do not stop those who engage in criminal conduct" (Congress Daily, 3/4). A summary of the GAO report is available online. Note: You must have Adobe Acrobat Reader to view the report.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.