Association health plans open door to premium theft

Last time the Trump Administration forayed into health insurance, it created an ill-advised executive order allowing sales across state lines. The administration went further this week by announcing an order to allow association health plans (AHPs).

Both ideas likely will do little to expand coverage or lower premiums, most experts say. The proposals also could open the door to the worst type of insurance fraud.

Trump’s latest order would allow creation of health plans that bypass state regulation and important safeguards on solvency standards. We’ve gone down this road before, and the scenery isn’t pretty.

Trusting consumers bought thousands of such lower-priced policies15 years ago. People wanted to save money or get coverage that wasn’t available from standard health plans. Many plans were legitimately offered through trade and professional associations.

Thousands of consumers didn’t get health claims paid, though, when some plans went belly up. Other plans were outright frauds. They often paid small claims to pacify policyholders in the beginning. then refused to pay larger claims. The con artists collected millions of premium dollars and fled. Consumers by the thousands were defrauded. Many were left in financial ruin, stuck with large medical bills they had to pay from their own pockets. One couple had a child with brain cancer, only to discover they’d bought into a fake health plan.

That’s one reason the Coalition adopted a position opposing AHPs back in 2003.

If association health plans catch on this time around, state regulators and others will have their hands full helping consumers steer clear of the inevitable fraudulent ones.

In the meantime, some con artists who got caught in the last round of bogus health schemes are just getting out of prison. They may revert to selling more fake health plans. So the administration’s timing couldn’t be worse. AHPs are one health reform consumers can do without.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.