Monday, December 17, 2007

Private Medicare Health Plans and Unscrupulous Practices

The New York Times has an article today discussing a disturbing trend practiced by some unscrupulous insurance salespersons. According to the article, some salespersons are misrepresenting and “hard-selling” their product in order to have elderly men and women unwittingly sign up for private Medicare health plans.

In order to prevent such tactics, the Bush administration has taken steps such as fining companies, issuing warnings to companies and using “secret shoppers” at some sales events hosted by these companies. According to the acting administrator of the Center for Medicare and Medicaid Services, such steps have reduced the number of reported issues; however, the New York Times, based on interviews conducted in Mississippi and Alabama, concludes that the problem still exists at a higher level than the government is acknowledging. Studies by the Medicare Payment Advisory Committee Commission appear to confirm the conclusions reached by the New York Times.

Enrollment in these private plans has increased by more than 8.9 million subscribers from December, 2005 to November, 2007. For sales of these plans, each agent receives anywhere from $350.00 to $600.00 in commission, providing incentive to push these programs.

Aside from being elderly, the main targets of the salespersons appear to fall into the low-income category. As stated in the article, “Most people who sign up for private Medicare plans are locked in for a full year, but many low-income beneficiaries are allowed to switch plans each month.” As these low-income beneficiaries can switch their plans more easily, the salespersons do not have to necessarily wait an entire year in order to sell their product.

The idea of taking advantage of the elderly who, as the New York Times states, “just have a hard time saying no” is rather disturbing. Add to this the fact that many of those targeted are low-income beneficiaries, and the practice is even more problematic. Many of those approached need no additional insurance, but the article states that the salespersons disregard this fact and continue to push. Even if those approached do desire additional insurance, the misrepresentations made by the salespersons do not allow the person to make an informed decision. Such practices by these few salespersons may also cast a bad shadow over all insurance salespersons in the eyes of those affected, preventing those who desire additional insurance from knowing whom to trust and what to believe.

It is admirable that the government is taking steps to try to prevent these practices. However, it is naïve to think that the government, through mere threats or fines, will be able to completely eliminate these practices. This fact is evidenced by the interviews conducted by the New York Times and the studies performed by the Medicare Payment Advisory Committee Commission. It would seem that the insurance companies themselves would need to create more stringent policies and possibly reduce the commissions for sales of these types of private Medicare health plans. Unfortunately, it is unlikely that such steps will be taken.

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