Scam alert issued on new health care law

By Ricardo Alonso-Zaldivar
Associated Press Writer / April 6, 2010

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WASHINGTON—Scam artists are taking advantage of the new health insurance law to peddle phony policies.

Health and Human Services Sec. Kathleen Sebelius said Tuesday she is warning state officials about a proliferation of scams involving phony health insurance policies. Federal investigators are also on the lookout.

Some of the hustlers are going door to door claiming there's a limited open-enrollment period to buy health insurance now. But the big expansion of coverage won't come for another four years, and door-to-door salespeople are unlikely to be part of the plan then.

"Unfortunately, scam artists and criminals may be using the passage of these historic reforms as an opportunity to confuse and defraud the public," Sebelius wrote in a letter to state insurance commissioners and attorneys general.

In the letter, released Tuesday, she urged vigorous prosecution of anyone caught selling fraudulent policies.

The new health care law will ultimately provide coverage to more than 30 million uninsured, but those changes will come slowly, beginning with smaller steps.

As early as the summer, people who have been turned down for coverage because of a medical problem will be able to buy a plan through a new high-risk health insurance pool. Many states already operate such pools, but the coverage has been expensive, and only about 200,000 are signed up. The new health care law provides an infusion of federal dollars to bring down costs and cover more people.

Then in the fall, two other consumer benefits take effect. Insurance plans will no longer be able to deny coverage to children with medical problems. And parents will be able to keep their adult children on their policies until they turn 26.

While those measures may make a big difference for particular families, experts say it will only lead to a small decline in the number of uninsured people, which now is nearly 50 million.

The big push to cover the uninsured comes in 2014, when new health insurance marketplaces will open for business and federal tax credits will start flowing to millions of working families and individuals. At the same time, Medicaid will be expanded to more people living near the poverty line. And health insurers will not be able to turn anyone down on account of a medical problem.

Once those tax credits and new consumer protections are in place, most Americans will be required to carry health insurance. The nearly $1 trillion, ten-year law will provide coverage to an estimated 94 percent of eligibile Americans when it is fully phased in.