Monday, December 20, 2010

Beware of Medical Discount Cards

From the Des Moines Register.

"Take a high unemployment rate. Add millions of uninsured Americans. Throw in a confusing, new health reform law. What do you get?

An environment ripe for scam artists peddling health coverage - specifically so-called "medical discount cards," which promise to reduce costs of care for customers. Such cards have long been problematic. Now some companies offering them may portray the plans as affiliated with federal health reform when they're not."


"These offers for discounts on medical care - dental, vision, prescriptions and doctor visits - are already proliferating and creating a "legion of problems" for Americans, according to a new report from an Iowa researcher. Colin Gordon, senior research consultant for the nonprofit Iowa Policy Project in Iowa City, released a report Thursday revealing problems with such plans.

They may come with cheap monthly rates, but they "make little difference" in reducing out-of-pocket costs. Advertisements lead people to believe the plans are "insurance" when they're not. (True insurance plans are regulated by state or federal authorities.) You may be offered access to "participating providers," but they may not include your doctor. Customers could be left with huge medical bills.

For example, a company may offer a discount on medical care of 10 percent. Treating a case of appendicitis - easily $10,000 - would leave you with a bill of $9,000. This is very little help for consumers. And that's assuming the company even helps cover the care you need.

Discount cards are a "sprawling and lightly regulated industry," according to the report. "At its worst, marginal and unscrupulous firms have prompted thousands of consumer complaints, state investigations and legal actions."

According to Gordon, 30 states have laws on the books that help protect consumers. They may require companies to state the plan is "not insurance" or register with state regulators. Iowa does not have such laws."


"The new health reform law will insure more people through newly-created programs, including insurance exchanges. Americans initially will be unclear about the details of how such opportunities work. And they could be unclear about what is being legitimately organized by the government.

Some private-sector entities will exploit this confusion the same way they did with government efforts to rescue people from home foreclosure. They'll put an image of the White House or President Barack Obama in the background and make a pitch about offering you affordable health coverage."


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