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Buyer Beware: Health insurance scams examined in new consumer report

November 12, 2010 | 12:18 pm

Consumer groups and government agencies have long taken aim at insurance scams they say cheat unsuspecting people, particularly those who can’t afford traditional health coverage or find themselves out of work.

A new report from the consumer advocacy group Families USA sheds light on this growing problem. The document, “Buyer Beware: Unlicensed Plans Prey on Health Care Consumers,” takes a look at associations that allegedly offer health insurance worth little if anything to consumers.

“The sale of phony insurance is not uncommon and often surfaces in economic downturns when people are desperate to buy affordable coverage,” Families USA explains in the report.  “People mistakenly think they will get a better deal if they purchase coverage through an association, but regulation and oversight of coverage offered through associations represents a significant challenge to state insurance departments.”

Uneven oversight by states exacerbates the problem, the report says, adding that the new national healthcare law takes steps to protect consumers partly by giving federal agencies greater authority to stop fraudulent or insolvent plans from continuing to sell their products.

For additional information about alleged scams, go to Families USA consumer alert page.

-- Duke Helfand