A misguided proposal to create federal oversight of certain group health plans could open wide the doors of fake health coverage, leaving consumers without urgently needed protection.
They’re called association health plans (AHPs). The Trump administration’s proposal would authorize AHPs. It’s a well-intended idea aimed at increasing insurance options for consumers. The U.S. Department of Labor (DOL) would oversee them, leaving state insurance regulators with little meaningful role. And that’s the rub.
Sole federal oversight is a dangerous gambit. AHPs have a sorry history of fraud and abuse under federal oversight. Nimble crooks realized the DOL was ill-equipped to regulate these plans 15 years ago. Burdened by too few staff and cumbersome procedures for investigating, the feds were outmatched.
Criminals set up large networks of fake health plans masquerading as AHPs. Smooth-talking pitchmen went door-to-door, peddling plans to trusting small businesses and consumers around the U.S., promising them the benefits of low-cost group health coverage. Mass emails and cold-callers in phone boiler rooms mass-marketed incessantly.
Legitimate health agents lost plenty of business when consumers were lured into buying the junk. They should stay alert to this proposal and its potential damage. More lost business could be on the line.
The plans typically paid small claims upfront to pacify policyholders, then refused to pay larger claims. Policyholders often were faced with huge medical bills they had to pay from their own pockets. People went bankrupt, lost their homes, and suffered damage when medical procedures were delayed.
One couple had a 9-year old boy with brain cancer, only to discover their health plan was worthless.