Fake insurance policies are certainly not new. “Insurance fraud is as old as the Himalayas,” explains James Quiggle, executive director of the Coalition Against Insurance Fraud. “It has been around as long as there has been insurance.” In the early 1900s, for example, a group called “The Phoenix Underwriters of New York City” fooled insurance-shoppers with official-looking paperwork and too-good-to-miss prices. The Phoenix and similar scams collected millions in premiums, while offering little to no actual coverage.

More than a century later, insurance scams are as prevalent as ever. “We followed a group called the American Trade Association (ATA),” says Cheryl Fish-Parcham, director of health policy at the consumer protection group Families USA. “It went by other names — Smart Data Solutions, Serve America Assurance — but it was really just one group of operators doing this huge scam across the country.” Before getting caught, the organization sold misleading policies to tens of thousands of consumers and raked in as much as $100 million by some estimates.

As health policy evolves, so do the scams. “A new breed of swindlers emerged after health care reform passed,” says Quiggle. These swindlers preyed on citizens’ confusion, especially over the fact that the reform bill requires all Americans to eventually buy health insurance. “Crooks knocked on doors with a straight face saying they’re selling Obamacare insurance,” says Quiggle. These con artists insisted  that consumers needed insurance ASAP. And yet, clarifies Quiggle, “There’s no such thing as an Obamacare insurance. Everything they were saying was a lie.”

During economic downturns, “it’s not unusual to see fake health plans pop up, because consumers are vulnerable,” explains Quiggle. Parcham concurs, explaining that new scams will likely always be around the corner. “Many of the people involved with ATA had already been indicted in other insurance scams,” she says. “Some of these are players that have been around a long time inflicting damage on consumers. I’m sure others will rise up and do bad things, so consumers and state insurance departments must remain vigilant.”

Here are some tips to help you avoid being duped by illegitimate insurance companies:

• Anything that uses the word “Obamacare” is almost certainly fraudulent. The official name of the health care reform bill is the Affordable Care Act (ACA).
• Don’t feel pressured to buy insurance immediately, or believe that it is only available through one provider. “The ACA doesn’t require people to buy insurance until 2014,” says Parcham. “When that happens, people can buy it at an exchange. Exchanges are regulated marketplaces where you choose from several licensed insurance companies online.” Visit healthcare.gov to learn more about exchanges, as well as current private and public health coverage options.
• Say “no thanks” to door-to-door salespeople. “Be careful of someone who shows up at your door and tries to make you sign up on the spot,” warns Quiggle. “Very few legitimate door-to-door insurance salesmen are operating today.”
• The old cliche “If it sounds too good to be true, it probably is” is appropriate for health coverage. Remember, a legitimate health insurer can’t stay in business if their rates are unbelievably low.
• Make sure the insurer is licensed by your state. If a company says it’s regulated by the Employee Retirement Income Security Act (ERISA) instead of state law, it is likely completely fraudulent. Visit the National Association of Insurance Regulators to find your state’s insurance department.
• Be wary of “union” or “association” plans representing a trade or hobby in another state (e.g. “The Photographer’s Association of Kansas” offering policies in Ohio). This is often an attempt to bypass regulators. Legitimate union or association plans don’t offer insurance to non-members.
• Do your research. “Check with your state insurance department before you buy,” advises Parcham. “They can usually inform you of complaints against a company. In some cases it may take a while before a state finds a problem, so you should also do a quick online search. Just googling the name of insurance companies can sometimes help you find out whether there’s been a problem.”
• Read the policy closely. “It may have all kinds of exceptions that make it very hard to have routine claims paid,” explains Quiggle. “Marketers will flat lie that you get full-benefit coverage when it is merely a discount card. People have given up legitimate health plans for what looked like a better deal only to find out their ‘insurance card’ left them on the hook for tens of thousands of dollars.”

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To read the related print article, “The Health Insurance Boondoggle” — complete with tips about disability and long-term care insurance — subscribe to The Post.

Health Insurance Swindles: A Multi-Million Dollar Industry The Saturday Evening Post

One of the bill’s authors was Michigan’s John Dingell, who represented the 15th Congressional district from 1933 to 1955. He was succeeded by his son, who has held this post from 1955 to today.

Now the longest-serving representative, John Dingell Jr. continues to promote his father’s Wagner-Murray-Dingell bill. Sixty-six years have elapsed, but the bill still lingers in committee, unable to move forward or to be killed. Other legislation has come and gone. The government has taken action on other issues, many of which were not as important.

We asked Dr. Benjamin Franklin why the government has not resolved the issue in over a half century of deliberation. The problem, he indicated, is that lawmakers like to work within familiar grounds. Radical change only comes when pressed by emergencies:

“Those who govern, having much business on their hands, do not generally like to take the trouble of considering and carrying into execution new projects. The best public measures are therefore seldom adopted from previous wisdom, but forced by the occasion.”

Where Is the Government’s Health Care Plan? The Saturday Evening Post