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Caveat emptor: GAO finds brokers frequently sell non-compliant health plans

September 17, 2020

Topics: Quote of the Day

By Jessie Hellmann
The Hill, September 16, 2020

Some health insurance brokers provided misleading or false information to potential customers about whether their plans covered preexisting conditions, according to an undercover audit completed by the nonpartisan Government Accountability Office.

The audit, requested by Senate Democrats, sought to determine whether companies selling health plans exempt from Affordable Care Act coverage requirements were being honest about the limitations of the plans, which tend to be cheaper but aren’t comprehensive and typically don’t cover preexisting conditions like cancer or diabetes.

In 31 “undercover phone calls” in which employees of the GAO posed as customers looking for health insurance that covered their preexisting conditions, eight of the sales representatives “engaged in potentially deceptive marketing practices,” the agency concluded.

In those instances, representatives sold GAO employees limited benefit plans that don’t cover preexisting conditions, including memberships to health care discount programs that don’t actually qualify as insurance.

For example, the report states, one sales representative told a GAO employee they were purchasing a comprehensive health insurance plan, but instead sold them two limited benefit insurance plans that don’t cover preexisting conditions.

“During the call, we repeatedly informed the sales representative that we had diabetes and had recently been seeking treatment for the condition. However, the application filled out by the sales representative on our behalf, which we later obtained, stated that we had not been treated for or diagnosed with diabetes for the past five years,” the report states.

This indicates that the broker may have intentionally falsified information on the application, which allowed the application to be submitted and the insurance policy to be purchased, but would not allow health care services related to our pre-existing condition to actually be covered under the terms of the policy.”

Some of the sales representatives refused to let GAO employees see the policy documents before they agreed to buy it.

Insurance brokers can be paid higher commissioners for selling limited benefit plans, while they earn a flat dollar amount for ACA-compliant plans.


GAO report (29 pages):


By Don McCanne, M.D.

Supposedly the Affordable Care Act requires all insurance plans to cover preexisting conditions, but that is not quite true. Plans that may be exempted from covering preexisting conditions include certain grandfathered plans, short-term limited duration plans, limited benefit plans, health care sharing ministries, and association health plans. Even Medigap plans can be denied to individuals who failed to enroll when they first became eligible. Also at risk is the preexisting coverage mandated by the Affordable Care Act that will be subject to a Supreme Court hearing shortly after the November election.

The GAO report confirms that the confusion created in the insurance marketplace exposes would be buyers to unscrupulous practices that may leave them without the coverage they thought they were purchasing, or they may be left unprotected merely because of the complexity in the fragmented insurance market that creates confusion as to just what the plans do cover.

In the midterm election, the Republicans campaigned on promising to cover preexisting conditions at the same time that they supported the repeal of the Affordable Care Act which would have removed such protections from the insurance marketplace. Since they have not offered an ACA replacement plan, their support for covering preexisting conditions was a hollow promise. Although some of the Republicans still contend that preexisting conditions should be covered, they have not made it a major issue in this election since they still have no replacement plan, and they don’t want to be caught with their plans down again.

Under a single payer Medicare for All plan, this issue goes away. Everyone is completely covered forever. It is astonishing that so many Americans reject Medicare for All while accepting Trump’s support of short-term junk insurance that leaves patients vulnerable to massive medical debt. There must be some loose screws around. We’d better tighten them up.

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About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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