GAO report finds brokers offered false info on coverage for pre-existing conditions

Some health insurance brokers provided misleading or false information to potential customers about whether their plans covered preexisting conditions, according to an undercover audit completed by the nonpartisan Government Accountability Office. 

The audit, requested by Senate Democrats, sought to determine whether companies selling health plans exempt from Affordable Care Act coverage requirements were being honest about the limitations of the plans, which tend to be cheaper but aren’t comprehensive and typically don’t cover preexisting conditions like cancer or diabetes.

In 31 “undercover phone calls” in which employees of the GAO posed as customers looking for health insurance that covered their preexisting conditions, eight of the sales representatives “engaged in potentially deceptive marketing practices,”  the agency concluded.

In those instances, representatives sold GAO employees limited benefit plans that don’t cover preexisting conditions, including memberships to health care discount programs that don’t actually qualify as insurance. 

For example, the report states, one sales representative told a GAO employee they were purchasing a comprehensive health insurance plan, but instead sold them two limited benefit insurance plans that don’t cover preexisting conditions. 

“During the call, we repeatedly informed the sales representative that we had diabetes and had recently been seeking treatment for the condition. However, the application filled out by the sales representative on our behalf, which we later obtained, stated that we had not been treated for or diagnosed with diabetes for the past five years,” the report states. 

“This indicates that the broker may have intentionally falsified information on the application, which allowed the application to be submitted and the insurance policy to be purchased, but would not allow health care services related to our pre-existing condition to actually be covered under the terms of the policy.” 

In another example, a GAO employee asked about ObamaCare plans, but was falsely told by a sales representative that ObamaCare was no longer in effect in 2020.

Some of the sales representatives refused to let GAO employees see the policy documents before they agreed to buy it.

Insurance brokers can be paid higher commissioners for selling limited benefit plans, while they earn a flat dollar amount for ACA-compliant plans. 

“We need to make sure that these companies and brokers are held accountable, and that consumers understand their options, when I say held accountable— these people should be in jail prosecuted and be in jail,” said Sen. Bob Casey (D-Pa.), who requested the GAO report, along with Sen. Debbie Stabenow (D-Mich.) 

Casey said he would introduce a bill allowing the Federal Trade Commission to crack down on deceptive online advertising for “junk” plans, tightening consumer disclosure requirements.

The report issued by the GAO on Tuesday was sent to HHS, which stated that it plans to conduct a review of the sales representatives who were identified as misleading customers and “take action as appropriate.” HHS noted that it can only take action against brokers that are registered to sell insurance on the healthcare.gov exchange, which includes ObamaCare plans and plans that are exempt from covering ObamaCare benefits.

Otherwise, states are responsible for overseeing the marketing and sale of the ACA-exempt plans. The brokers GAO called were based in Alabama, Florida, Kansas, Pennsylvania and Wyoming, which all allow the sale of limited benefit plans.

None of the brokers sold the GAO employees short-term health plans, which were expanded by the Trump administration as an alternative to the ACA, but don’t cover the same benefits, including coverage for preexisting conditions.

But Democrats argue that the administration’s disparagement of the ACA and embrace of short-term plans has led to a proliferation of similar plans that don’t comply with the law. 

Stabenow noted that the Trump administration cut funding for navigators — outside groups that help people sign up for health insurance but aren’t affiliated with any specific products or plans. 

“Instead of a person you can call that is being paid for through HHS with your federal tax dollars that you can count to be objective and give you the full information, people are now finding themselves in a confused situation and being pushed towards a variety of these plans,” Stabenow said. 

“The bigger question to HHS, is what are they going to do to fix that?”