(Hat tip to Don McCanne). Apparently being a scummy insurance company and selling not-quite-fraudulent policies to dumb consumers is all fine and dandy—or at least legal. This is not the first or last we’ve head of this type of thing—a company called Mega Life and Health selling a cut rate policy via commission salesmen to unsuspecting punters. When something really bad happens the punter discovers that the policy is worth basically squat, and they owe $200K plus. The judge says this is America and you should have read the fine print. We all know that the best cons are the legal ones.
There’s a related category of insurers who pay out on small claims but dissapear completely when enough big ones come in. Jon Cohn’s soon to be published book will blow the lid of that bunch (I hope) so I won’t say much about them. But essentially these are all on a sliding scale from California Blue Cross cancelling coverage after the fact, to Golden Rule selling their underwritten products, to the con artists and outright fraudsters. And given the collapsing state of the employer insurance market, and the growth in desperation from people like the couple in this article, I guess it’s only a matter of time before these insurers become a bigger and bigger piece of the market and someone like United HealthGroup buys them.
And if Active Health Management is over on the Yin side of the health insurance world, these shysters are out there on the Yang end. There is a possible solution to the whole thing, but if the responsible heads in the insurer world won’t push for serious reform of their own industry, these kinds of stories will make a government run system much more likely. I suspect I’ll be saying “I told you so” in 2016 or thereabouts
CODA: I missed this at the time, but the (now fortunately dead) Shadegg bill would have aloowed the shysters at Mega and their ilk to do this everywhere, as PBS NOW reported. See the excellent transcript.