Despite warnings from law enforcement officials and the Federal Trade Commission, the number of Americans falling victim to fake health plans continues to rise, according to a report from the Insurance Journal. Confusion and a lengthy timeline surrounding the application of new healthcare reforms is part of the problem.
Citing statistics from the Coalition Against Insurance Fraud, the Journal notes that nearly 60 percent of state fraud agencies have reported a "sharp increase" in the number of health insurance fraud cases. The Journal reports that one fake health insurance agency, the American Trade Association, fraudulently sold plans to nearly 12,000 Americans resulting in $14 million in premiums nationwide.
The same group was successful in selling a fake plan to one Oklahoma man, Bob Harper, who later developed a heart condition requiring him to purchase a pacemaker. After receiving a $43,000 bill, he contacted his insurance agent to pick up the tab only to find that they were not a legitimate agency, the Journal reports. In addition to being responsible for the bill, Harper found it extremely difficult to find affordable coverage due to having a pre-existing condition.
In addition to a lack of consumer knowledge regarding the new healthcare laws, many scammers lure unsuspecting individuals with aggressive marketing tactics ranging from ads and phone calls to t.v. commercials.
"You may see ads stapled to neighborhood telephone poles, flyers left on your car or maybe you'll get a phone call from someone who's selling health insurance at extremely low rates, as low as $29.99 a month in some cases," CAIF's Jim Quiggle told CNN Money.
Quiggle noted that many of these companies do a very good job of appearing legitimate and often have official-sounding names and convincing paperwork. Most of the paperwork requires consumers to list their current health insurance information, Social Security number and credit card or bank account number. While some scammers are only interested in collecting premiums from a number of victims, others are able to use the information to commit identity theft or, in worst-case scenarios, medical identity theft.
While both forms of identity theft are damaging, using a victim's medical information can be life-threatening if their records are changed. In the event of an emergency, a patient could unknowingly be given harmful drugs or procedures that interfere with their current condition.