New GAO Report On Deceptive Coverage Marketing, Extended GA Waiver Comment Period

Christel Deskins

On September 16, 2020, the U.S. Government Accountability Office (GAO) publicly released a new report revealing troubling marketing practices by sales representatives selling products that do not have to comply with the Affordable Care Act’s (ACA’s) consumer protections. These ACA-exempt arrangements include short-term limited duration insurance, limited benefit plans, health […]

On September 16, 2020, the U.S. Government Accountability Office (GAO) publicly released a new report revealing troubling marketing practices by sales representatives selling products that do not have to comply with the Affordable Care Act’s (ACA’s) consumer protections. These ACA-exempt arrangements include short-term limited duration insurance, limited benefit plans, health care sharing ministries, and association health plans.

The investigation was conducted in response to a request from Sens. Robert P. Casey (D-PA) and Debbie Stabenow (D-MI), who asked for insights on marketing and sales practices for ACA-exempt products. Sen. Casey previously issued an investigative report on misleading online ads for non-ACA plans and the challenges consumers face when shopping for health insurance.

Through 31 undercover phone calls by investigators posing as an individual with diabetes or heart disease in need of health insurance, GAO agents found that 26 percent of calls (8 calls) with sales representatives included potentially deceptive practices; the GAO intends to refer those instances to the Federal Trade Commission and state insurance regulators. Another 6 percent of calls (2 calls) were not deceptive but provided unclear or inconsistent information. In the remaining 68 percent of calls (21 calls), GAO agents were referred to an ACA-compliant plan and offered appropriate and accurate information about ACA options. (It is worth listening to some of the call recordings.)

The calls were placed to sales representatives in Alabama, Florida, Kansas, Pennsylvania, and Wyoming identified using common online search terms such as “cheap health insurance” and by directly contacting insurers. Half of the study was conducted during the 2020 open enrollment period and half was conducted outside of that period while making clear that the individual would qualify for a special enrollment period under the ACA. These circumstances enabled GAO agents to assess whether the sales representative would direct them to an ACA-compliant plan or an ACA-exempt arrangement.

The Results

Many agents, brokers, and other sales representatives provided consumers with accurate information about their eligibility for ACA coverage and, in some cases, correctly explained that the caller would qualify for ACA subsidies. Some also explained the limits of ACA-exempt arrangements. In one call, the representative informed the caller that their diabetes would be disqualifying for a short-term plan and would not be covered if someone else tried to sell them a similar policy.

But this was not true in about one-quarter of these calls. This raises serious concerns that sales representatives are using deceptive and misleading marketing practices to promote ACA-exempt arrangements to consumers with preexisting conditions who otherwise qualify for low-cost, comprehensive ACA coverage. These sales representatives told callers that preexisting conditions would be covered even when explicitly excluded by the plan and refused to provide documentation prior to enrollment. Others implied or asserted that the individual was being enrolled in comprehensive insurance (rather than, say, a health care sharing ministry or a bundle of limited benefit plans and membership in an association). These calls were riddled with misinformation: some representatives suggested that no other coverage was available or intentionally falsified the caller’s health status on the application.

More Of The Same

Though the results cannot be generalized to all sales representatives, the report illustrates the range of deceptive practices that could cause a consumer to mistakenly and unknowingly enroll in a product that does not meet their needs and then face significant unexpected out-of-pocket health care costs as a result. This is not uncommon, and the media has documented instances where consumers thought they were enrolling in ACA coverage only to be left with tens or hundreds of thousands of dollars in medical bills. These risks are even more concerning during the COVID-19 pandemic, when consumers could face significant out-of-pocket costs under ACA-exempt products.

Although GAO callers were not ultimately sold a short-term plan, the GAO study echoes some of the same findings from a recent year-long congressional investigation of short-term plans that revealed widespread misleading and fraudulent marketing, including misrepresenting the coverage and urging consumers to purchase plans over the phone without written information. That investigation also found that broker-mediated enrollment increased by about 60 percent in December 2018 and then 120 percent in January 2019, leading the committee to conclude that sales representatives are “benefiting from, and possibly capitalizing on the marketing and advertising around the ACA’s open enrollment season.” Lawsuits, prior secret shopper studies, and multi-state market conduct exams have revealed similar practices regarding short-term plans. The GAO study confirms that this activity extends to other ACA-exempt products, such as limited benefit plans.

The GAO acknowledges that enrollment in ACA-exempt arrangements is likely growing. The report points to a series of recent federal changes to help explain increasing enrollment in ACA-exempt arrangements, including Congress’ zeroing out the individual mandate penalty for 2019 and a Trump-era rule to expand access to short-term plans. The COVID-19 pandemic could also create additional demand for affordable health coverage, including ACA-exempt arrangements.

In comments on the report, the Department of Health and Human Services (HHS) stated that it will assess whether the sales representatives using potentially deceptive practices are registered to offer ACA plans through HealthCare.gov. HHS also noted that its agreements prohibit agents and brokers from providing misleading or false information to consumers or the marketplace.

Extended Comment Period On Georgia Waiver

Following reports of technical issues with submitting comments on the latest iteration of Georgia’s waiver under Section 1332 of the ACA, HHS extended the federal comment period by one week. The original deadline was for September 16. On September 17, HHS announced that the deadline would be extended to September 23 and that the technical issue had been resolved. The agency has already posted comments that had been received by September 11.

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