Scam-heavy health plans may soon be federally regulated

By Andrea Nurko



Palm Beach Post Washington Bureau



Saturday, July 23, 2005



WASHINGTON — Jill Burgess, a small-business owner from Delray Beach, said she never missed a payment to her health insurance company.



But when that company was shut down by the Florida Department of Financial Services in 2003 for operating without a license, she was left with $30,000 in unpaid medical bills from complications during her third pregnancy — even though she'd paid $11,000 in premiums.



"The health insurance scam destroyed our financial well-being," said Burgess, 33, who with her husband filed for bankruptcy and lost their business, a small underground drilling company.



Florida has been among the hardest hit by the latest wave of health insurance fraud that targets the self-employed and small-business owners who buy insurance through memberships in associations.



About 200,000 policyholders were left with $252 million in unpaid bills from various companies nationwide between 2000 and 2002, according to a Government Accountability Office report.



Roughly 30,000 Floridans have been victims of such scams, according to the Coalition Against Insurance Fraud, a group of 1,400 consumer groups, government agencies and insurers.



Until now, association health plans — which help lower costs of insurance premiums by selling to groups of people, including small-business owners and their employees — have been regulated by both state and federal government agencies. But a bill expected to be voted on by the House next week would shift regulation entirely to the federal government. A similar bill has been filed in the Senate.



Researchers from Georgetown University's Health Policy Institute released a report Thursday warning that the bills could leave thousands of Americans vulnerable to scams.



Mila Kofman, author of the report and assistant research professor at the Health Policy Institute, said the bills are a "license to steal" because regulation relies on self-reporting and does not require background checks on people applying for licenses.