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HEALTH PLANS: Mega Life and Health — Time to call AHIP, Goldman Sachs, Credit Suisse and BlackStone out

I spent a little time last year on the issue of Mega Life and Health. There’s only one term for this company, and what’s really frightening is that it’s a major player in AHIP. If AHIP is ever going to get itself out of the self-serving position it’s in and transition to being an organization of responsible private health plans that can have a reasonable conversation about the positive role health plans can play , the plans who could live in a future of community rating need to leave, or jettison the scumbags like Mega.

What’s the activity I’€™m so upset about?

Mega Life and Health sells health insurance door to door to poor to middle and low income working people. They claim that they are selling a product which their customers understand. But the point their customers clearly do not understand is that the insurance€ has severe limits on what it pays, especially what it pays per day in cases of expensive care. So if a policyholder gets sick and needs hospital care, Mega only pays out a fraction of what the hospital charges, leaving the poor sucker patient on the hook for the rest. Last year the California Supreme Court ruled that this con, like all the best cons, is legal. And this type of policy continues to be sold (more or less legally) in most states.

Over at Colorado Health Insurance Insider
I found this tale of woe of an electrician earning $40,000 a year with
no benefits who joined Mega’€™s front organization the National
Association for the Self-Employed€ after being sold a bill of goods
by a commissioned sales rep. His son had cancer and ran up bills of
$500,000 of which Mega paid out $45,000. It’€™s not completely clear
from the story at which point Mega cut them off, but if the story from
the couple who sued in the California Supreme Court is an indication,
what probably happened is that the policy had a maximum per diem
payment of less than 10% of what was actually billed. And now
bankruptcy and poverty awaits.

Mega has already dealt with class action suits because it’s been selling policies through a front organization that many states find illegal. More importantly it has been selling these policies using a network of barely-trained door to door agents. For example as reported in the Mobile Register (AL) several former employees show that the company had no ethics and hid what it was doing from its customers.

None of the three former Mega agents — Chaney, Aplin and Parrish
— had insurance sales experience before joining the company. Each said
they left the company after they learned more about other health
insurance policies. "The training was how to close a deal. It wasn’t
about the nuts and bolts of insurance," 33-year-old Aplin said. Chaney,
29, said he worked for Mega about four months before he saw another
insurance company’s policy and began to believe he was selling
incomplete coverage. Salespeople "don’t even talk about the insurance,"
he said. "You talk about the NASE and then you get them and you go. "I
didn’t know that the insurance was linked to the NASE," Chaney said.
Parrish said the experience has been hard for her personally. "I wish I
would have had sense enough or the insight enough to have researched it
before I got into it," said Parrish, who said she checked with the
Better Business Bureau and Alabama Department of Insurance but did not
detect any warning signs. <SNIP> In the beginning, she said, she
thought it strange that she would be sent to pursue potential clients
in areas an hour’s drive from home while other agents were assigned to
Dothan. She said she found it odd that her paychecks came from her
district manager’s personal account rather than from the company.
Parrish said she also wondered why her questions at staff meetings
seemed to her to go unanswered and why agents were not supposed to
leave promotional materials in the homes of people who did not buy a
policy. Mega agents she knew were not supposed to use insurance terms,
but to sell the benefits of NASE membership and its preferred
providers, she said. Now she believes, they were "giving those people
false security."

Does anyone believe that these sales people clearly
communicated the exact nature of the policies they were selling, and
exactly how much it would cover of a share of a severe illness? And
yet, this is the type of activity that both the Shaddeg bill and the
push towards unregulated individual insurance — promoted by the Bush
Administration and many others on the free-marketeer right — will
encourage. We also know that it’s similar to the activity that many
managed care plans are  using selling Medicare Advantage plans (or at
least were until thy voluntarily agreed to desist earlier this year).

I’ve also been told by someone who knows a little more
about Mega that some 30% of revenue goes to the commissioned sales
agents and that the medical loss ratios for the insurance plan is below
30%! Even Arnold Schwarzenegger thinks that MLRs shouldn’t drop below
85%!

So what if anything can be done about this? Mega Life and
Health is now not only the poster child for all that’s wrong with
health insurance–it’s squarely in the mainstream.  Why
do I say that?

Well it’s time to connect the dots.

Take a look at the governing body of AHIP, the health plans’€™ trade association. William J. Dewed, the
Chairman, President & CEO of Health Markets, which owns Mega Life
and Health, is on the board. HealthMarkets is right there next to
people like Mark Ganz from Regence, Scott Armstrong from Group Health
Cooperative of Puget Sound, Charles Baker from Harvard Pilgrim, not to
mention CEOs of several other big non-profit Blues and George Halverson
from Kaiser. And of course Angela Braly and Jeannine Rivet,
representatives of what we hope might be new guards at Well point and
United, are there too.

Now several people may be ready to say "a pox on all
their houses"€ and believe that no good at all can come from private
insurance companies. But many of those health plans are supporting, in
name at least, reform efforts in which companies like Mega Life and
Health would be barred from selling these type of policy.  Furthermore,
it’s in the best interest of those larger organizations to have a
serious conversation about the practical help that health plans can
bring to a reformed health care market. Many of those organizations
have decent proposals and something to offer. Mega clearly does not.

So step one in cleaning up their act would be for those
insurers to either jettison their scumbag colleagues from AHIP, or to
leave themselves.

Step two is not AHIP’s to make. It is though equally important.

Who owns Health markets? Like many companies it’€™s owned
by "€œprivate equity"€. But in this case these are not just any €œprivate equity€ companies. The three owners are a) the biggest and
now publicly traded private equity firm, Blackstone Partners, b) the
most prestigious and most profitable investment bank, Goldman Sachs,
and c) a unit of giant European investment bank Credit Suisse. While
the owners and employees of these august organizations are making their
mega-millions, it’€™s about time that they paid some attention to what
their "€œinvestment" is doing to the people it’s supposedly serving.

These connections need to be made.

We’€™re not talking fraudsters on the margins, we are
talking about them being aided and abetted by the privileged sitting
inside the gilded palace. And if those investment organizations can’€™t
bring themselves to change Health Markets out of shame, then perhaps
some Democratic congressmen can help them.

This is a case where for their own good, these organizations should do the right thing.

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Kevin
Guest
Kevin

Just a little more FYI Article: MEGA Ordered To Refund $4.6M in Premiums and Pay Record $1M Fine MEGA Life and Health Insurance Company has been ordered to refund $4.6 million in overpaid health insurance premiums to Maine consumers – plus an additional $1 million in civil penalties for four years of calculating those premiums using flawed methods. More trouble for MEGA Life MEGA Life’s latest troubles originate in Maine where the Maine Bureau of Insurance and the state’s Attorney General announced that they have fined MEGA Life and Health Insurance Company $1 million in civil penalties and have ordered… Read more »

Kevin
Guest
Kevin

So you’re actually going to sit here and tell us all, that they only have 4 complaints in Georgia. Try reading this, and thet get back to me. I suppose I’m making up all of this. “States getting involved Consumers have been complaining about Mega’s sales practices and false promises for years. So many complaints have been filed that many state’s Attorney Generals are getting involved. Since 2002, Mega has been fined by seven states and is being investigated by 36 other states who are working together to find out more. While the results of the multi-state investigation won’t be… Read more »

ECB
Guest
ECB

Sorry, I got the quote wrong about Assurant, it is actually, “The policies of these companies are atrocious. If only you had to deal with the folks selling them….”.

ECB
Guest
ECB

Why doesn’t everyone type Assurant in the search window or go to https://thehealthcareblog.com/the_health_care_blog/2007/01/health_plans_do.html
and see what others say about Assurant.
One blog actually states, wait until you have to deal with the people of Assurant, and it was not in a positive manner. But wait, Kevin sell Assurant, so that blog must be nothing but LIES, LIES, LIES, from all “noobies” who aren’t financial planners. I’m gonna have fun on the new Assurant blog!

ECB
Guest
ECB

You haven’t proved anything either. Becoming a financial planner and getting established are two different things. You have this knack for accusing people of dodging issues and so forth, but yet you do the same. Answer me this, do your Assurant plans pay the way you explain it to customers, and the way they understand it 100% of the time? You started your little bitch blog about Mega, called a bunch of people noobies and other dumb names, yet your company has been investigated by numerous states, cancelled peoples policies, even though you know so much you actually said it… Read more »

Kevin
Guest
Kevin

I’m sorry, but were you drunk when you typed your last post? I can’t even follow it. If I understand the first part correctly, according to you becoming a financial planner is an easy title to get. Really? Easy? That’s news to me. From what I have been told, it’s one of the tougher industries to actually get established in. But hey, you obviously are much more informed than I am. Secondly, I didn’t know everything in 1 week. Obviously that’s a little tough to do in any industry. Why is it, I have to keep asking you to quit… Read more »

ECB
Guest
ECB

Congrats on being a financial planner, it’s a very easy title to get that makes other think you went to school for it and then you are more qualified to sell insurance than others. So you had never sold insurance before, went to, I guess, UGA and went through training and got appointed. You knew everything after training and one week selling the product? Maybe you should just go straight to the CFP instead. It just shows me how brainwashed you really are. You think you sell a product with no holes and pays exactly the way the CUSTOMER, not… Read more »

Kevin
Guest
Kevin

So if i have you’re rant straight, My FACTS are not valid because you think I haven’t been in the field long enough? That makes sense. I’m sorry for trying to be a master at my profession, and actually know what I’m talking about when I’m in front of people. If I had you fooled in thinking that I have been in the business for longer than what I have, than I must be a pretty educated individual, and someone who soaks up a lot of information. That way, when customers have questions about things, I don’t have to bull… Read more »

ECB
Guest
ECB

It’s funny that all ex-mega agents think that current agents think they have the “best gig” in town. Whatever company you sell, if you don’t have confidence in your product, it will show to the customer. I never claimed Mega was the best insurance plan. But in the year and a half I have been selling Mega, I have as of today, yet to have a complaint. It will probably happen one day but it hasn’t happened yet. And I have quite a few people on the books. And I did some research on what Kevin had such a problem… Read more »

Ex-Mega agent
Guest
Ex-Mega agent

My state does not have the CareOne Select Plan so I never saw a brochure. As far as the contract, don’t assume no one reads it or understands it because I did. As for working hard, good for you. I’ve always worked very hard in full time jobs – Mega wasn’t a hard job – it just made me feel guilty because so many customers ended up very unhappy with their coverage – so before you assume you’re the only one who works hard and understands their contract, you’re not. You’re not any different than any other agent who thinks… Read more »

ECB
Guest
ECB

If you remember the CareOne Select Brochure, it does state Major Medical Plan. You have to add the riders to make it a major medical plan, but they are. We don’t have the Care Choice here in GA yet but it’s coming and what is slated for GA is supposed to have more benefits that the CareOne series. There is a 15 state investigation. Check it out at http://www.medicalnewstoday.com. That’s what I am talking about, it happens to all insurance companies. It’s a lame excuse but it’s true. HealthMarkets was under that 30 state investigation because of deceptive sales practices… Read more »

Ex-Mega agent
Guest
Ex-Mega agent

ECB – I don’t represent any insurance company anymore. I do question the validity of you stating that Mega plans are major medical. I would check that out – even the new Care Choice is not a true major med. You might want to clarify that – I apologize if I’m incorrect, I’m pretty sure they are classified as indemnity plans or catastrophic expense plans. If HealthMarkets is taking steps in the right direction, good for them, they should have done that long ago – as far as Blackstone, I still feel like they are either going to sell the… Read more »

Ex-Mega agent
Guest
Ex-Mega agent

One more thing…..15 states investigating Assurant? I don’t know if that’s true or not and I’m not defending any insurance company, but what about Mega being investigated by 30 + states in the multi-state investigation? What about Mega having to pay hefty fines in Maine in addition to refunding people for over-charging their premiums? If the company is really on the up and up like they claim, I don’t see how they could be under this much scrutiny. By the way, here’s the link to the BBB – I think it has been posted earlier, but here it is again.… Read more »

ECB
Guest
ECB

It seems like different people had totally different experiences when it comes to UGA/Cornerstone. The plans are considered major medical plan though. I think what most people don’t realize is that whatever insurance company you have, you still have to pay more than deductible and coinsurance maximum, most of the time. My AllState agent had BlueCross with a $5,000 deductible and $2,000 stop loss and he still had $32,000 out of pocket for complications of pregnancy. I know most will say BS but I don’t have a way to prove it but that’s what he told me. Usual and Customary… Read more »

Ex-Mega agent
Guest
Ex-Mega agent

Actually, my district always told me that the complaints with the bureau of insurance in the state I’m in were very low and that’s what we should tell our customers when we were questioned about the bad press to call the DOI to check the company out. What bothered me is the amount of negative information online and the Better Business Bureau has a lot of complaints about HealthMarkets, Inc. and all its subsidiaries. So the DOI in GA doesn’t have a lot of complaints, what about The Better Business Bureau? Nationwide, Mega has a lot of complaints – more… Read more »