Consumer Watchdog Urges White House to Reject Bid by Notorious Junk Insurance Company to Evade Health Reform

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Oct 08, 2010, 10:01 ET

Woman Left With $450K in Medical Bills Joins Call for President to Enforce New Consumer Protections

WASHINGTON, Oct. 8 /PRNewswire-USNewswire/ -- Consumer Watchdog called on President Obama to reject waivers requested by junk health insurance plans, including one that left Dana Christensen with $450,000 in medical debt, that would allow them to evade minimum benefit requirements under the federal health reform law.

The New York Times reported yesterday that HealthMarkets, which sells insurance through MEGA Life and Health, is among the companies seeking waivers to continue selling limited-benefit policies under the federal health reform law.

Dana Christensen was left with $450,000 in medical bills when her husband Doug died of bone cancer and their MEGA policy did not cover his treatment. The Christensens had even purchased a special rider for chemotherapy, but it paid only $1,000 a day while chemotherapy cost up to $18,000 a day. On his deathbed, Doug asked Dana to divorce him so she would not be responsible for the bills. She refused. Read the Christensens' story: http://www.consumerwatchdog.org/patients/articles/?storyId=13540.

Limited-benefit policies like those sold by MEGA are the kind of junk insurance that health reform was intended to end, said Consumer Watchdog.

"MEGA's bid to evade the law is a litmus test for President Obama. If he waives one of the most important rules for one of the worst insurance companies in the market, why did he pass health reform at all? No insurer should get a free pass to cap insurance benefits, least of all the kind of junk policies sold by MEGA that don't even cover common medical events like a night in the hospital or an emergency room visit," said Jamie Court, president of Consumer Watchdog.

MEGA has been the subject of multiple investigations by state regulators and private lawsuits that have found, among other violations, that fraudulent marketing by the company's agents misled consumers about the benefits the policies deliver.

"What's the point of paying for health insurance and then when you need it, discovering the benefits you thought were promised and paid for just aren't there?" asked Dana Christensen. "My hope for health reform is that it prevents anyone else from going through what Doug and I did."

Consumer Watchdog called on the Department of Health and Human Services to require employers and insurance companies that it has already granted waivers to make public the terms of their limited-benefit policies and the data showing health insurance premiums will increase without the exemption.

Employers argue that limited-benefit policies are better than no insurance, but because employees don't understand how bad the insurance is, they may receive tens of thousands of dollars in medical bills before realizing they're not covered, said Consumer Watchdog. Temporary exemptions on an employer-by-employer basis may be called for, but no insurance plan should get a blank check to evade the law, said the group.

"The President wants to avoid stripping consumers of health coverage they trust and depend upon. But insurance that is more scam than security isn't worth saving," said Carmen Balber, Washington director for Consumer Watchdog.

Consumer Watchdog is a nonpartisan consumer advocacy organization with offices in Washington, D.C. and Santa Monica, CA. Find us on the web at: http://www.ConsumerWatchdog.org.

SOURCE Consumer Watchdog