With the Affordable Care Act set to take effect in January, the 44mn Americans currently without health insurance represent a sizeable chunk of business for producers. While strategies used to gain that business vary widely, regulators are raising concerns about certain tactics they call “deceptive.”
At issue are producer-owned websites regulators say are misleading healthcare customers into thinking they are shopping on the official federal marketplace, Healthcare.gov. Other websites mimic the official health exchanges for the 17 states that run their own insurance marketplace.
“People are buying up all kinds of domain names that suggest the healthcare exchange and they’ve had a fair amount of traffic,” said Jim Quiggle with the Coalition Against Insurance Fraud. “Some of these sites may be relatively benign and sell legitimate products, but are deceptive and use the exchange concept as a lure.”
To Richard McCaffrey, enforcement attorney for the New Hampshire Insurance Department, such a practice is not only morally ambiguous, it’s illegal.
“Under the Uniform Insurance Trade Practices Act, you’re not allowed to do anything that operates as a fraud or a deceit. At minimum, this is a deceit,” McCaffrey said. “Using a website that has a state name and the word ‘exchange’ conveys a very specific meaning—it has power for the consumer.”
McCaffrey is currently representing the state’s insurance department against activities by William Steffan, a licensed Arizona producer. Until last week, Steffan was selling insurance under the domain name NewHampshireHealthExchange.com, a URL McCaffrey believes he bought in 2010 after Congress passed the ACA.
McCaffrey became aware of Steffan’s website after a New Hampshire small business owner used it to shop for employee coverage, believing the site was the official government exchange.
“That’s what’s disturbing to me. This was a relatively sophisticated consumer who was deceived,” McCaffrey said. “If he was deceived, other, less sophisticated consumers could be.”
Producers who have used this strategy don’t believe it’s dishonest, however.
Reno-based MacLean Financial Group owns the URL NevadaHealthLinkInfo.com, suggestive of the official NevadaHealthLink.com. Marketing director Will McDonald told Insurance Business he saw nothing wrong with the practice.
“We support [the exchange] just as much as they support us,” McDonald said. “We don’t feel that it’s unethical. If our website helps people find information, absolutely we’ll do it.”
McCaffrey said he is more tolerant of websites like MacLean’s, which clearly state that they’re run by a producer
“As long as it’s clear that that’s what [the website] is, it’s fine,” McCaffrey said. “But I don’t mean in a three-point font saying it’s not affiliated with a government agency.”