Last week had a startling article by Julie Appleby at the USA Today about the result of a 36-state investigation of HealthMarkets, resulting in a $20 million settlement, for duping lots of health care consumers into buying substandard health coverage.
The investigation, prompted by numerous complaints, found that insurer HealthMarkets failed to properly train its sales agents, who didn’t always fully disclose the limits of its health policies to consumers and sometimes did not pay for medical services promptly.
HealthMarkets, owned by three private-equity firms including the Blackstone Group, has about 612,000 policyholders in 44 states through its subsidiaries: Mega Life and Health Insurance, Mid-West National Life Insurance and Chesapeake Life Insurance.
The company sells an array of plans, many of which pay only limited amounts toward medical care. The settlement follows the January release of the investigators’ findings, which covered company practices from 2000 to 2005.
“The severity of their actions certainly warranted that level of penalty. They hurt a lot of people,” says Washington Insurance Commissioner Mike Kreidler, whose state and Alaska led the investigation. Since 2002, HealthMarkets has been fined by at least seven states and faced lawsuits from dozens of policyholders.
There has been lots of commentary on the web about these practices, and these products–at sites like Managed Care Matters, and The Health Care Blog which includes a report that these insurers and issues are active in California.
Recently, the Sacramento Bee profiled a story of a couple that got snookered into buying “junk insurance” by one of the companies listed above. That article, spotlighted the pending SB1522(Steinberg), sponsored by Health Access California, as a legislative remedy, to begin to address this troubling issue.