Older and Disabled Americans Fall Prey to Private Insurers’ Aggressive Marketing Tactics

Older and Disabled Americans Fall Prey to Private Insurers’ Aggressive Marketing Tactics

Lack of Federal and State Oversight Puts Consumers at Risk of Losing Access to Health Care and Paying More for Their Care, Consumer Advocates Report

JANUARY 29, 2007 — Insurance agents are pushing people with Medicare into private health plans that do not meet their health care or financial needs, according to a new report by leading consumer groups.

In its study, California Health Advocates and the Medicare Rights Center detail the unscrupulous sales practices of insurers and call for heightened government oversight of private insurers selling Medicare health and drug plans.

“Older and disabled Americans are victimized by private insurance agents who take advantage of the confusing array of private plan options,” said Clare Smith, president and CEO of California Health Advocates, a Medicare advocacy organization.

“Agents who enroll consumers into their company’s more profitable, private health plan — instead of their stand-alone drug plan — are rewarded with a higher commission,” said Ms. Smith.

“The federal government must protect older and disabled Americans from rampant exploitation,” said Robert M. Hayes, president of the Medicare Rights Center, a national consumer service organization.
“People with Medicare are being locked into costly and ineffective health and drug plans without any meaningful oversight of marketing activities by federal or state regulators,” said Mr. Hayes.

The consumer groups report a wide range of marketing abuses such as agents going door-to-door unsolicited, posing as Medicare representatives, and telling consumers they will lose Medicare or Medicaid if they do not sign up for a particular plan.

Consequences of abusive marketing include people winding up in health plans where their doctors do not participate in the network, having to pay more for their care than they need to, and losing access to health care they previously had.

High-pressure private plan marketing — at times done by poorly trained agents — is often done in the privacy of one’s home. In-home marketing is known to result in the highest “closing rates.”

After family and friends, insurance agents are the next most frequently used source of information for people considering enrolling in a Medicare private drug plan, according to a June 2006 MedPAC study.

Insurance agents typically earn as much as $400 to $500 for enrolling a consumer in a Medicare Advantage plan, such as a HMO, PPO or private fee-for-service plan (PFFS) but $60 to $80 when they sign someone up for a stand-alone drug plan.

The groups report that PFFS have been at the center of many incidents of marketing misconduct.

Beginning in 2007, most people with Medicare can only change health plans one time between January 1 and March 31; they are then “locked in” to their plan for the remainder of the year.

Poor people with Medicare who also have Medicaid, the dual eligibles, have the right to change drug and health plans month to month, making them vulnerable to aggressive marketing tactics throughout the year.

In their joint report “After the Goldrush: The Marketing of Medicare Advantage and Part D Plans, Regulatory Oversight of Insurance Companies and Agents Inadequate to Protect Medicare Beneficiaries,” California Health Advocates and the Medicare Rights Center make several recommendations to Congress, Centers for Medicare and Medicaid Services (CMS) and the states that would help end abusive marketing practices.

Among the recommendations in the consumer groups’ report are:

  • Congress must repeal lock-in and allow people to change health and drug plans throughout the year;
  • Congress must allow state regulatory agencies to oversee plan marketing activities;
  • CMS must require 24-hour written advance notice of what products will be marketed during a home visit;
  • CMS must require plans to accept enrollment over the phone; and
  • States should enforce and expand current protections under state law to all Medicare Part D sales.

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California Health Advocates is dedicated to Medicare beneficiary advocacy and education efforts for Californians. (www.cahealthadvocates.org).

Medicare Rights Center is the largest independent source of health care information and assistance in the United States for people with Medicare (www.medicarerights.org).

Karen Fletcher
Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.