Cover Me

Kathern Cathey thought she had an insurance policy that would save her life. Not exactly.

James Quiggle of the Coalition Against Insurance Fraud monitors the marketing of limited ­insurance and discount medical products.

"There are an estimated 45-50 million uninsured people in this country," he says. "Every one of them is a potential customer. That's a huge pool of legitimate business."

As Allen Erenbaum, counsel for the Consumer Health Alliance, points out, the caveat that applies to shopping for insurance applies to discount medical plans: "It's the same thing in the insurance world — people need to understand what they're getting and what they're not getting."

Cinergy's "member services" number doesn't appear to provide good service for its members.
Daniel Kramer
Cinergy's "member services" number doesn't appear to provide good service for its members.
While she waits to hear if she'll get the surgery she needs, Kathern Cathey relies on painkillers to make it through.
Daniel Kramer
While she waits to hear if she'll get the surgery she needs, Kathern Cathey relies on painkillers to make it through.

The caveat might apply to Alliance members as well: In 2006, when Cinergy joined the Alliance, the Florida Office of Insurance Regulation found that the company's agents used a form and "telephone scripts that contain language that is untruthful and misleading."

Cinergy entered into a consent order with the Florida office, a consent order that also stated Cinergy's:

• "Failure to refund all periodic charges to members that cancelled their membership in the discount medical plan organization within the first thirty days after the effective date of enrollment in the plan"

• "Failure to follow complaint procedures as filed with the office"

• "Failure to contain a Web site address on advertising materials."

Per the consent order, Cinergy waived a hearing and "all rights to challenge or to contest" the order, and also agreed to pay a $7,500 penalty and $3,000 in administrative costs.

But one of the more egregious acts by Alliance members, and one that states have had either difficulty or no interest in pursuing, is the creation of dummy corporations that exist solely to make limited insurance and discount plans available to their members — a practice that is illegal in some states. This tactic appears to have been drummed up to mirror the group buying power and lobbying clout of established organizations like AARP.

To wit: Cinergy makes its insurance possible through membership in something called the National Congress of Employers, which claims to have been incorporated in 1996 and exists to "advocate for policy changes, pilot programs and call upon politicians to create protections, services and benefits that people can rely on, regardless of how they make their living." Although the NCE claims to have offices in New York and Washington, D.C., neither jurisdiction's registered corporations database shows such an entity.

And while the NCE claims to advocate these policy changes via its political action committee, the Federal Elections Commission database shows that the PAC was only registered in March 2009 — a little late for the "key bills in Congress" the National Congress of Employers highlights on its Web site, the most recent of which are from 2004. (The PAC files monthly financial reports, which report that the PAC has never contributed, received, transferred, refunded, lent or disbursed a single dollar.)

An NCE representative originally agreed to get us some information about what it is the association actually does, but subsequent phone calls went unreturned. (According to its Web site, the NCE doesn't just make low insurance premiums possible — membership gives you a golden key to discounts on such things as movie tickets, flowers and amusement parks.)

Of course, the National Congress of Employers should not be confused with the National Congress of Employees, which has an identical logo and which also offers discount "healthcare" through a company with the same Irving address as dozens of other companies owned by Alliance HealthCard, a Consumer Health Alliance member.

The confusion is understandable, though. Here's the National Congress of Employers' origin statement:

The N.C.E. was formed in 1996 by former politicians, public servants, attorneys and business leaders to address the needs of micro-­business through political advocacy and lobbying.

And here's the National Congress of Employees' origin statement:

The N.C.E. (National Congress of Employees) was formed in 1996 by former politicians, public servants, attorneys and business leaders as a national not-for-profit organization that represents the needs and concerns of America's growing small business workforce.

Conveniently, many of the other associations that offer discount healthcare to members are managed by the same company — National Association Consultants — in suburban St. Louis. This single address holds the charters for companies such as the Consumers Independent Association, United Consumer Awareness Association, America's Health Care Consumer Association, American Consumer Group, American Benefits Association, American Business Association and American Affinity Association.

Despite the fact that all these associations appear to do nothing between the consumer and the provider, and despite the fact that most are related to the Consumer Health Alliance, and despite the fact that they somehow all wound up in some guy's office in Missouri, no one at the Alliance has decided to pool their resources into one gigantic association with enough pull to offer major insurance, instead of limited plans which won't cover your hospital fees when a grape-sized tumor attacks your pancreas.

"One issue might be, there are certain benefits that are available under a group coverage situation that don't require individual underwriting," the Alliance's Erenbaum offers by way of explanation.

So this means all the allegedly disparate companies can only work with minor-league insurance companies who are only too happy to issue significantly limited policies.

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