As California prepares to roll out its effort to market the Patient
Protection and Affordable Care Act, criminals have increasingly been working
schemes to take advantage of consumers who may not be fully informed about the
complex health reform law commonly known as Obamacare that will require them to
buy insurance if they don't have it.
The scams include high-pressure e-mails, phone calls from people masquerading as representatives of the federal government, and visits from seemingly official enrollers trying to persuade people to buy a policy, sign up for a bogus medical card or give out their personal information.
"Obamacare scams are popping up all over the country. They've been identified in at least half of the states, and possibly more," said Jim Quiggle, spokesman for the Coalition Against Insurance Fraud, a Washington, D.C., group that works with consumers, insurance companies and government agencies to combat fraud.
The perpetrators have a wide range of tactics and could come from anywhere, he said. "Nobody knows whether the scams are carefully orchestrated by an organized criminal enterprise or whether this is simply buckshot phone calls by individual entrepreneurs who think they can make a quick dollar off of the impending launch of health reform," Quiggle said.
Either way, consumer experts say, the ploys are designed to take advantage of a large segment of the population that may not yet understand the details of the most comprehensive overhaul of the nation's health system in decades.
Threats of arrest
In one mass e-mail scheme that has been circulating in recent weeks, recipients are told that failure to obtain health insurance under the Affordable Care Act could result in incarceration.
"Are you breaking the law?" reads the e-mail from a "health insurance expert." "With the President's health care mandate now passed into law, you could face prison time if you do not get healthcare coverage immediately. We can help you avoid penalties and find an affordable plan."
The threatening come-on is false, because the health care law will not lead to imprisoning anyone for not getting coverage. Additionally, signups for the new health program will not begin until Oct. 1, so no "immediate" action can be taken.
In another reported scheme, scammers have been trying to swindle consumers out of an "enrollment fee" to sign up for coverage under the law, even though no fee is required to participate.
Scams started as soon as the law passed in 2010, but they are becoming more widespread as the law gets close to being implemented, Quiggle said. "Now there's another wave during the run-up to the launch of whole system," he said.
Expecting a surge
Officials from the state Department of Insurance, as well as from Covered California, the new state agency charged with selling coverage under the law, say they haven't yet seen an uptick in criminal activity related to the health law. But they expect to in the coming weeks and months.
"This is ripe for the opportunity to rip people off," said Nancy Kincaid, spokeswoman for the state insurance department. "It's not just your financial information, but they could have access to your health information."
Elizabeth Abbott, director of administrative advocacy for Health Access California, said her consumer group has received reports of websites that look like the official Covered California site, but are actually created by people purporting to be insurance agents casting around for potential customers.
"They put in their address and phone and what kind of policy they were interested it in, and it subjected them to high-pressure sales tactics," Abbott said.
She said she did not know if the pitches are being run by aggressive agents or con artists trying to defraud people, but she said Health Access reported the misleading sites to the state attorney general's office and Covered California.
The frequency of these attempts can be tough to pin down because, in many cases, consumers simply delete e-mails or hang up the phone without reporting incidents.
She hung up
That's what Judy Littlefield of Loomis (Placer County) did when she received a phone call about a month ago from someone trying to obtain her personal information under the guise of selling her a medical card under President Obama's new health law.
"I just told them I don't give out information over the phone," Littlefield said. And then she hung up.
Littlefield, a 72-year-old retiree, already has health coverage through Medicare. The new law isn't focused on seniors. The exchanges are for uninsured individuals, or those in small businesses, who are under the age of 65 and not eligible for the federal health programs for seniors.
Quiggle, the spokesman for the Coalition Against Insurance Fraud, commended Littlefield's approach.
"Your best defense against these cons is simply close the door or hang up the phone," he said. "Don't let these crooks engage you in conversation. They are very smooth and well trained, and they might try to sweet talk you into giving up your sensitive information.
"Confusion is a scammer's best friend, and these criminals are exploiting the confusion and people's lack of understanding of health reform and what it means to their lives."
A poll by the Kaiser Family Foundation this spring showed that 42 percent of people surveyed didn't know the health law is actually the law of the land. That includes 12 percent who believe the law has been repealed by Congress and 7 percent who believe it has been overturned by the Supreme Court.
Lori Wilson, chief operating officer for the Golden Gate Better Business Bureau, said fraudsters will use that confusion against seniors and other vulnerable people in the population.
"People with language barriers and low income are, unfortunately, also targeted for scams," she said.
The state has set up a virtual marketplace, called Covered California, where consumers can start buying insurance on Oct. 1, and with the clock ticking, upward of 30,000 people are being trained to become certified educators, enrollment counselors or insurance agents certified to sell coverage under the new law.
To reduce the potential for fraud, the state insurance department has urged Covered California to ensure that those new hires are adequately screened and monitored.
Covered California spokesman Larry Hicks said the agency shares those concerns and is taking antifraud steps, including requiring background checks and fingerprinting for enrollment counselors.
"Consumer safety is paramount," he said, "and we're taking steps to protect consumers' privacy and personal information as best we can."
Victoria Colliver is a San Francisco Chronicle staff writer. E-mail: firstname.lastname@example.org Twitter: @vcolliver
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