Discount Buyer Beware of Health Discount Programs

In a time of rising healthcare costs, discount health programs sound like a good thing. However in California, state agencies have had numerous complaints about healthcare discount programs that overstate their services or misrepresent themselves as insurers. According to the Los Angeles Times, consumers have lodged complaints against more than 150 unlicensed discount health and dental plans over the last four years. This has prodded the California Department of Managed Health Care to consider new licensing regulations.

According to the Times, the industry describes its function as to offer mainly "ancillary" services such as dental, vision or chiropractic care. In some cases, insurance companies or employers themselves offer health discount programs as an additional benefit to their members or employees. The benefits of purchasing through such programs appear considerable, the discount companies say they accept members with existing medical conditions, have no limits on use and can slash healthcare costs as much as 80% by negotiating discounts with providers.

The Times reports that in California, two of the companies that have complaints allegedly lodged against them are the Care Entrée discount program, which regulators say falsely promised members unrestricted access to medical providers, and a plan offered by the Consumer Resource Association. Care Entrée has now agreed to become licensed with the state.

On the other hand, two major insurers have successfully offered discount programs in the state and have had no complaints lodged against them; Vital Savings, a product of Aetna, and OptumHealth Allies, an arm of UnitedHealth Group.

California has only recently begun to aggressively enforce licensing regulations and consistently oversee the industry due to a squabble between agencies as to whose responsibly such oversight was. "There is no question that essentially ceding jurisdiction . . . was in fact an invitation [for discount plans] to come to California," Cindy Ehnes, the department's director told the Times. "Consumers deserve a fair product and deserve not to be ripped off."

Discount plans operate in all 50 states. In 21 states, a license is required. Now, state agencies in California may go beyond the licensing requirement and try to better oversee the industry and protect consumers.

Related Resources:

• California cracks down on discount health plans (Los Angeles Times)
• Health Insurance and Benefits: Your Rights (FindLaw)
• Top 10 Ways to Make Your Health Benefits Work for You (FindLaw)
• General Buying Tips - Identifying and Stopping Fraud (FindLaw)