Cheating the Elderly

As a hedge against ruinous health-care expenses, most senior citizens purchase health insurance to supplement the Medicare program that pays less than half of their medical costs. In their anxiety to protect themselves, many seniors have fallen victim to unscrupulous insurance agents pushing fraudulent or useless policies. A Capitol Hill subcommittee estimates that one-fourth of the $13 billion that senior citizens spent on so-called Medi-Gap insurance last year was wasted on redundant, counterfeit or unnecessary policies. There are laws that prohibit these abuses, but they need to be enforced more vigorously.

Charlatans peddling bogus insurance have frightened and cajoled gullible seniors into purchasing policies that they do not need and do not understand, and that are so riddled with exemptions as to be worthless. A 79-year-old Santa Rosa woman, for example, spent $6,500 on nine different policies. Many companies, mostly smaller ones, have tediously complex claim procedures and dismal records for settling claims.

State law prohibits the misleading advertisement of insurance and the sale of unnecessary policies, and requires companies selling medical insurance to maintain a ratio of claims to premiums above 60%. The law has not been enforced vigorously, although the state insurance commissioner, Roxani Gillespie, may be coming to life. She recently shut down a firm engaged in spurious insurance advertising, and has several similar suits pending. And she plans to publish a guide to help seniors make more informed decisions.

The commissioner could do more. Several California insurance companies show loss ratios of less than 60%, some as low as 15%. These firms are just soaking up cash. The commissioner wants to publicize the ratios and let consumers decide for themselves. But that would merely advertise their lawbreaking, not stop it. The commissioner’s responsibility is to enforce the letter and the spirit of the law, revoking the licenses of violators and serving as an advocate if present state law is inadequate.

The dream of those who created Medicare was to spare aging Americans the fear of economic ruin when faced with illness. Declining benefits have left that dream unfulfilled, and the failure to provide protection against long-term illness has reduced thousands of older Americans to poverty. This deplorable situation can be remedied by responsible supplementary insurance. It is unconscionable that a bad situation is made worse by the exploitation of these people who need help.