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CNN Live Sunday

Interview With Mila Kofman

Aired September 07, 2003 - 16:40   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


FREDRICKA WHITFIELD, CNN ANCHOR: Amid sky-rocketing health care costs, a new breed of scams is being born. This one preying on the uninsured with bogus health care plans. Mila Kofman is a Georgetown University researcher who found out these bogus plans and found out that it's scamming an awful lot of folks out of millions of dollars. Good to see you, Mila.
MILA KOFMAN, GEORGETOWN UNIVERSITY: Hi, thank you for having me.

WHITFIELD: Well, apparently this is a pretty significant problem. We're talking about 100,000 people out there in the year 2001 with $85 million in unpaid medical costs because they thought they had insurance but come to find out they really don't. How in the world is this happening?

KOFMAN: Well, this is a growing problem and that number of 100,000 people you just quoted is really an underestimate. No one knows the extent of this problem. Both federal and state regulators believe that the number is much greater than 100,000.

WHITFIELD: Well, how does this work? How are people finding out about these insurance plans, these bogus insurance plans only think thinking initially they're legit? Are they getting a phone call from someone or seeing advertisements?

KOFMAN: Sure. You can buy these bogus plans through a licensed agent or join a professional association and sometimes those professional associations get dupe under to buying the bogus plans or you can get it on the Internet. There are lots of ways these bogus plans get marketed and unfortunately consumers just don't know enough to be asking the right questions.

WHITFIELD: What is it about these plans that make them look legit? What kind of language are they using? How do they seem to send the message that they are the real deal?

KOFMAN: They look exactly the same as the real plans out there. By looking at the marketing material and the summary plan descriptions, consumers and agents on many occasions can't tell the difference. They really look legit. You really can't tell that you've signed up for a bogus plan until it's too late. When you start having major claims.

WHITFIELD: OK. So what are the red flags? We have here on our screens a couple ideas. It says, you know, avoid any indicators that make it appear like it's too good to be true, such as low rates. KOFMAN: Sure. they do sell by pricing the premiums 20 to 30 percent lower than what's available in the private market. So the low, so the rates are lower than generally available. When consumers shop around for new coverage, the first thing they should do is call the insurance department in that state to make sure the health plan is authorized to sell in that state. And that's really the only way to protect yourself. make sure you're buying a licensed health policy.

WHITFIELD: In fact, you give us the key word of protecting yourself. Let's go through the list of things in which you can do to try to protect yourself best you can. Ask the agent who will be responsible for paying the claims and verify the insurance provider with the state commissioner's office. One that you mentioned pretty much at the top of the interview. So, if some of the agents don't really seem to know much about these companies because they're recommending, you're saying, a lot of these phony plans. Why should you rely on the agent to help you weed out the good ones from the bad ones?

KOFMAN: There are many experienced agents out there that will check out the company for you, that will find you a great policy. But you have to be alert. You have to double check the agent. So make that call to the insurance department and really protect yourself.

WHITFIELD: So, what happens if you fall for it? You pay for that initiation fee and you're paying your premiums and you go and get some doctor's visits and start racking up quite a bit of bills and then you're stuck with these bills because they haven't been paid for by an insurance company. What recourse do you have?

KOFMAN: Well, unfortunately, no good news for consumers out there. In many cases the state or the federal government comes in and shuts down the company and appoints a person to find assets. So, when any assets are found, they are used to pay off some of the medical bills. But in most of these cases there are very few assets found. So consumers are on the hook for the unpaid medical bills. Of course, providers get stuck with those bills that consumers can't pay. I talked to many victims who took out second mortgages on their house, used their credit cards to try to pay off the bills. Unfortunately, when you get scammed by one of these. There is no safety net for you. You are stuck.

WHITFIELD: Well if you know about it and the Federal agent know about it, why are some predicting this problem is only likely to get worse before it gets better?

KOFMAN: Well, health insurance premiums are increasing in the double digits and small businesses and self employed people are desperate for affordable alternatives and there's no end in sight. Premiums will increase next year as well. And so to the extent that we continue to have a need for affordable coverage and no supply, that creates opportunities for criminals to come in and sell phony plans.

WHITFIELD: All right, Mila Kofman, of Georgetown University, thanks very much for helping us sort it out and to know how to identify those red flags. KOFMAN: Thank you very much.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired September 7, 2003 - 16:40   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: Amid sky-rocketing health care costs, a new breed of scams is being born. This one preying on the uninsured with bogus health care plans. Mila Kofman is a Georgetown University researcher who found out these bogus plans and found out that it's scamming an awful lot of folks out of millions of dollars. Good to see you, Mila.
MILA KOFMAN, GEORGETOWN UNIVERSITY: Hi, thank you for having me.

WHITFIELD: Well, apparently this is a pretty significant problem. We're talking about 100,000 people out there in the year 2001 with $85 million in unpaid medical costs because they thought they had insurance but come to find out they really don't. How in the world is this happening?

KOFMAN: Well, this is a growing problem and that number of 100,000 people you just quoted is really an underestimate. No one knows the extent of this problem. Both federal and state regulators believe that the number is much greater than 100,000.

WHITFIELD: Well, how does this work? How are people finding out about these insurance plans, these bogus insurance plans only think thinking initially they're legit? Are they getting a phone call from someone or seeing advertisements?

KOFMAN: Sure. You can buy these bogus plans through a licensed agent or join a professional association and sometimes those professional associations get dupe under to buying the bogus plans or you can get it on the Internet. There are lots of ways these bogus plans get marketed and unfortunately consumers just don't know enough to be asking the right questions.

WHITFIELD: What is it about these plans that make them look legit? What kind of language are they using? How do they seem to send the message that they are the real deal?

KOFMAN: They look exactly the same as the real plans out there. By looking at the marketing material and the summary plan descriptions, consumers and agents on many occasions can't tell the difference. They really look legit. You really can't tell that you've signed up for a bogus plan until it's too late. When you start having major claims.

WHITFIELD: OK. So what are the red flags? We have here on our screens a couple ideas. It says, you know, avoid any indicators that make it appear like it's too good to be true, such as low rates. KOFMAN: Sure. they do sell by pricing the premiums 20 to 30 percent lower than what's available in the private market. So the low, so the rates are lower than generally available. When consumers shop around for new coverage, the first thing they should do is call the insurance department in that state to make sure the health plan is authorized to sell in that state. And that's really the only way to protect yourself. make sure you're buying a licensed health policy.

WHITFIELD: In fact, you give us the key word of protecting yourself. Let's go through the list of things in which you can do to try to protect yourself best you can. Ask the agent who will be responsible for paying the claims and verify the insurance provider with the state commissioner's office. One that you mentioned pretty much at the top of the interview. So, if some of the agents don't really seem to know much about these companies because they're recommending, you're saying, a lot of these phony plans. Why should you rely on the agent to help you weed out the good ones from the bad ones?

KOFMAN: There are many experienced agents out there that will check out the company for you, that will find you a great policy. But you have to be alert. You have to double check the agent. So make that call to the insurance department and really protect yourself.

WHITFIELD: So, what happens if you fall for it? You pay for that initiation fee and you're paying your premiums and you go and get some doctor's visits and start racking up quite a bit of bills and then you're stuck with these bills because they haven't been paid for by an insurance company. What recourse do you have?

KOFMAN: Well, unfortunately, no good news for consumers out there. In many cases the state or the federal government comes in and shuts down the company and appoints a person to find assets. So, when any assets are found, they are used to pay off some of the medical bills. But in most of these cases there are very few assets found. So consumers are on the hook for the unpaid medical bills. Of course, providers get stuck with those bills that consumers can't pay. I talked to many victims who took out second mortgages on their house, used their credit cards to try to pay off the bills. Unfortunately, when you get scammed by one of these. There is no safety net for you. You are stuck.

WHITFIELD: Well if you know about it and the Federal agent know about it, why are some predicting this problem is only likely to get worse before it gets better?

KOFMAN: Well, health insurance premiums are increasing in the double digits and small businesses and self employed people are desperate for affordable alternatives and there's no end in sight. Premiums will increase next year as well. And so to the extent that we continue to have a need for affordable coverage and no supply, that creates opportunities for criminals to come in and sell phony plans.

WHITFIELD: All right, Mila Kofman, of Georgetown University, thanks very much for helping us sort it out and to know how to identify those red flags. KOFMAN: Thank you very much.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com