Unprecedented Jump In Health Insurance Scams Since Bush Presidency

by Mary Mahon, Commonwealth Fund

"These scams prey on people who are seeking access to affordable health insurance coverage," said Karen Davis, president of The Commonwealth Fund. "Not only do we need better methods to identify and shut down illegal operations, we need to expand access to affordable coverage and reduce the demand that phony plans are exploiting."

Every state has laws making it illegal to operate an insurance company without a license. Unlicensed plans ignore state and federal insurance regulations, including solvency standards that ensure a company will be able to pay the claims of enrolled individuals.

In their report, "Health Insurance Scams: How Government Is Responding and What Further Steps Are Needed," researchers from Georgetown University's Health Policy Institute note that health insurance scams have been rising over the past two years as insurance premiums have increased at double-digit rates.

Since 2001, four unauthorized plans have left nearly 100,000 people with approximately $85 million in unpaid medical debts and without health coverage.

While no state is immune to the problem of unauthorized plans, some have been especially hard hit. In Florida nearly 30,000 victims of scams have been left uninsured and burdened with unpaid medical bills. The Texas Insurance Department has in the last two years shut down 129 unauthorized insurance companies, affiliates, operators, and their agents, whose illegal actions affected 20,000 Texans.

"Being victimized by a phony health insurance scam is worse than being uninsured. At least when you are uninsured, you have no expectation of someone else paying your medical bill. Here, not only are you stuck with huge medical bills, you've also been defrauded thousands of dollars in premiums."