New Legislation Introduced to Prevent Deceptive Health Care Marketing to California Consumers

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Senator Ted Lieu introduces bill to protect from fraud and abuse those newly eligible for health care programs as California readies for federal health care reform implementation

Los Angeles – Today, Senator Ted Lieu (D-Torrance) unveiled SB 1313, legislation designed to help consumers from California’s increasingly diverse communities take full advantage of new health care programs under the Affordable Care Act (ACA), the far-reaching federal reform law celebrating its two-year anniversary this week. The proposed legislation would put in place new consumer protections against fraudulent or deceptive health care marketing. Senator Lieu was accompanied by key community groups supporting the bill.

“Millions of Californians have access to affordable health care coverage, many for the first time in their lives,” said Senator Lieu. “However, we know from past experiences that dishonest people take advantage of the consumers’ lack of knowledge about new opportunities or enrollment criteria.” To protect consumers from misinformation and deceptive marketing,  Senator Lieu’s legislation seeks to boost consumer confidence and trust in health care reform by strengthening consumer protections and closing gaps in state law.

The bill was spurred by past complaints of fraudulent marketing suffered by consumers, many of them limited English speaking, in which for example, vendors attempted to sell fake dental insurance or sell costly products that consumers didn’t need.

The legislation prohibits any plan, insurer or their representative from misrepresenting the requirements of ACA, including the individual mandate to buy health insurance. It also requires prior approval of marketing materials, extending these protections to health insurance products regulated by the Department of Insurance and improves existing protections under the Department of Managed Health Care. The bill prohibits selling certain types of products, such as cancer-only insurance, to individuals that do not have health care coverage that meets basic requirements. The bill also ensures that representatives of health care plans or insurers who have been previously disciplined are prohibited from participating in other types of enrollment activities.

“As new health care coverage becomes available to millions of Californians, we can expect scam artists to come out of the woodwork to take advantage of vulnerable consumers signing up for insurance for the first time,” stated Betsy Imholz, Special Projects Director for Consumers Union. “California should act now to protect families from being misled or enrolled into junk
insurance plans. This bill provides important safeguards to help consumers get the health care coverage they need for their families.”       

“Immigrants and their families are probably the most vulnerable to the kind of fraud this bill aims to prevent, because of language barriers, confusion about the law and fear of immigration consequences,” said Reshma Shamasunder, Director of the California Immigrant Policy Center. “The bill’s provisions will provide peace of mind and a greater degree of confidence for eligible immigrants and their families, eager to enroll in new health coverage programs that will be offered in 2014,” added Ms. Shamasunder.

SB 1313 includes a key provision that will ensure that those who do not speak English are able to get the health care coverage they need. The bill requires health plans and insurers that market to non-English speakers to provide translation and interpretation services in the same language. “These provisions are critical for the 40 percent of Californians who do not speak English at home,” stated Sarah Mercer, Director of Government Affairs for the California Pan-Ethnic Health Network (CPEHN). A CPEHN report released in February found that limited English proficient (LEP) communities will constitute nearly 1 million of the 2.6 million California residents who will be eligible for subsides in the Exchange. Under the new law immigrants who are citizens or lawful permanent residents are eligible to participate in the Exchange and apply for subsidies. 

“Communities of color, small businesses, and limited English proficient communities stand to benefit the most from health care reform. But these are also the communities that have the least knowledge about what is required under the ACA. SB 1313 will help California maximize enrollment in new health care programs by strengthening consumer confidence in these programs,” added Ms. Mercer. 

The legislation is scheduled to be heard in Senate Health Committee on April 18, 2012.