The High Cost of Health Insurance Fraud


If you pay for health insurance, you’re painfully aware that costs have increased. What you might not realize is that fraud plays a big part in escalating health care costs, and the loss is passed along to you.  

According to the National Health Care Anti-Fraud Association (2008), the U.S. spends more than $2 trillion on health care each year, and at least 3% of that ($68 billion!) is lost to fraud. Put another way, according to Reuters (2009), fraud accounts for 19% of the $600 to $800 billion in annual waste in the U.S. health care system annually.

Health insurance fraud runs the gamut from bogus Medicare claims to fake health plans and kickback scams for prescribing useless treatments, worthless medical equipment and unnecessary services. Bogus health insurance plans and discount prescription programs are also popular with swindlers looking to separate you from your money. You think you’re buying into something that will save you a few bucks. What you typically get instead is a worthless piece of paper.  In a worse-case scenario, many small businesses are targeted for peddlers of fake health insurance, attracted by the empty promise of low prices and great benefits.

Higher health insurance premiums aren’t the only price we pay for health insurance scams and fraud. Our very lives can be endangered by quack medical treatments. Identities are stolen, ruining people's credit. Businesses lose money because health insurance fraud increases the costs of employee coverage. People can even lose their health care coverage or jobs when insurance companies go out of business from fraud losses.

Insurance companies devote resources to tracking down fraud, but that cost has to be passed along to consumers. Government agencies also spend millions tracking down fraud and prosecuting it, but their resources are stretched thin and health insurance fraud often takes a back burner to higher-profile crimes.

You can help, too. Don’t tolerate health insurance fraud. Understand that the people committing fraud – whether through little white lies or big fat scams – are criminals taking money out of your pocket.  Report suspected fraud to your state’s insurance department. Educate yourself and others about fraudulent insurance practices. Support tougher anti-fraud laws. Equally important, understand that promises of unbelievably cheap health care insurance are just that – unbelievable. Get health insurance quotes and buy health insurance from reputable companies.

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