Private Health Insurance: Unauthorized or Bogus Entities Have Exploited Employers and Individuals Seeking Affordable Coverage Page: 4 of 22
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2003, including that of the District of Columbia,2 and also obtained data
from the Department of Labor's (DOL) Employee Benefits Security
Administration (EBSA), which conducts civil and criminal investigations
of employer-based health plans.3 We consolidated information from DOL
and the states to determine the unduplicated number of entities identified
from 2000 through 2002 and the numbers of affected employers and
policyholders.4 We also asked states to provide information on a related
type of problematic arrangement-discount arrangements that may be
misrepresented as insurance. We interviewed officials with EBSA,
including those in three of its regional offices (Atlanta, Dallas, and San
Francisco); the National Association of Insurance Commissioners (NAIC);
insurance departments in four states that were identified as being affected
by a relatively large number of these entities (Colorado, Florida, Georgia,
and Texas); and other experts and associations, including those
representing insurance agents and administrators of employers' health
benefits. Because many of the federal and state investigations regarding
these entities were ongoing at the time we did our work, we generally do
not name specific entities except in situations in which publicly disclosed
actions have been taken against an entity. We also examined in detail the
operations of one of the largest entities identified during this period,
Employers Mutual, LLC, and the actions federal and state governments
took to stop it from operating.
In summary, DOL and the states identified 144 unique entities not
authorized to sell health benefits coverage from 2000 through 2002.
Although every state was affected, with at least five entities marketed in
each state, these entities were most often identified in southern states.
Specifically, of the seven states with at least 25 entities, five were located
in the South. These 144 unauthorized entities covered at least 15,000
employers and more than 200,000 policyholders from 2000 through 2002.
At the time of our 2003 survey, DOL and the states reported that the
2Throughout this testimony, we include the District of Columbia in our discussion of states;
we refer to each state's insurance department, division, or office as an insurance
3In conducting our state survey, we asked states to use the following definition: "an
unauthorized health benefits plan is defined as an entity that sold health benefits, collected
premiums, and did not pay or was likely not to pay some or all covered claims. These
entities are also known as insurance scams." We asked EBSA to provide information using
a similar definition.
4States provided data on the number of policyholders and DOL provided data on the
number of participants; we refer to the combined data as policyholders in this testimony.
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United States. General Accounting Office. Private Health Insurance: Unauthorized or Bogus Entities Have Exploited Employers and Individuals Seeking Affordable Coverage, text, March 3, 2004; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc294100/m1/4/?rotate=270: accessed January 19, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.