States on Hook to Prevent Obamacare Scams

States on Hook to Prevent Obamacare Scams

Thomas Cheplick

Thomas Cheplick, a freelance reporter for the Heartland Institute, writes from Cambridge,... (read full bio)


In the wake of the rush to pass the national health-care overhaul, federal government authorities have put states on alert to watch for so-called “Obamacare con artists” attempting to take advantage of widespread confusion surrounding the president’s health care overhaul, targeting the elderly and poor Americans in “free health care” scams.

These scams were unanticipated in the federal health-care overhaul legislation, and there are no funds in the Patient Protection and Affordable Care Actfor state insurance commissions to help them combat the surge in healthcare scams.

James Quiggle, a spokesman for the Coalition Against Insurance Fraud, says the Obama administration had a chance to take antifraud steps, but in the rush to pass the legislation these matters were pushed aside.

“During the run-up to the health care reform bill, no one was thinking that far in advance. But then as health care reform got closer, it became apparent that health care crooks were starting to infest the streets with scams,” Quiggle said.

“It became apparent there was a good chance that people would start offering Obamacare scams, but by the time Congress and the Obama administration knew this, the Obamacare provisions were already locked in and ready for voting,” he continued. “No anti-fraud provisions could be put into place because the legislative negotiations were effectively closed down by then.”

‘A Growing Problem’

Quiggle says firm figures on the number of Americans who have lost money to these criminals are not available yet, as the phenomenon has only just begun.

“Obamacare scams are a growing problem that began immediately after the healthcare reform law passed,” Quiggle said. “There are an increasing number of reports of scams of suspicious characters knocking on doors, taking out cable TV ads, sending out 'blast faxes' telling people they can get health coverage for free.  I do not think anyone knows the exact identity of these characters yet.”

According to Quiggle, misconceptions about the law’s provisions give criminals an opportunity to exploit consumers. Following the passage of President Obama’s health care legislation, eHealthInsurance, a major online broker for health insurance, told reporters its call centers were overwhelmed with calls from uninsured individuals asking, “Where do we get the free Obamacare, and how do I sign up for that?”

According to a press conference with personnel from the U.S. Department of Health and Human Services at the National Press Club on April 6, the criminals in these types of fraud schemes frequently impersonate a government worker, tricking the elderly into believing if they do not pay health insurance now they will have to pay 2.5 percent of their income in fines and may go to jail. The individual mandate provision of Obama’s law does not take effect until 2014, and it contains no jail penalty.

The Better Business Bureau reported on one case where an an Arizona-based company told an elderly Alabama woman she could sign up for the “new government health care program” but there were only twenty spots left and the company needed her bank account number to begin the process.

Stepping Up Enforcement Efforts

Diana Furtchgott-Roth, a health care policy researcher at the Hudson Institute, says the government must crack down on “Obamacare con artists” firmly, and she agrees Congress should have foreseen the rise of these criminals given the accelerated push for the legislation.

“Congress did not anticipate the ramifications of this legislation. They did not even anticipate these companies doing massive tax writedowns.  I cannot expect them to have seen this coming,” Furtchgott-Roth said. “States will have to bear the burden now.”

Quiggle says state authorities are aware of the fraud problem and will be stepping up enforcement to compensate for the lack of federal preparation.

“This sort of thing is primarily a state issue, for state insurance commissions to deal with, and now state insurance departments are on high alert. They are issuing consumer warnings right and left, as well as working with the media in trying to alert the public to what’s happening,” Quiggle said. “Obamacare scams are in the front-and-center crosshairs of the regulators, but some criminals will still slip through.”

Thomas Cheplick (thomascheplick@yahoo.com) writes from Cambridge, Massachusetts.

Thomas Cheplick

Thomas Cheplick, a freelance reporter for the Heartland Institute, writes from Cambridge,... (read full bio)