"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, Mila Kofman, Kevin Lucia, and Eliza Bangit of 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. Among their findings:
Kofman and colleagues recommend several steps to prevent the proliferation of phony health plans:
"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 bills," said Kofman, assistant research professor at Georgetown. "Here, not only are you stuck with huge medical bills, you've also been defrauded thousands of dollars in premiums."
The Commonwealth Fund is a private foundation supporting independent research on health and social issues. To read or download publications, visit our website at www.cmwf.org .