Insurance fraud booms during recession; Short-term health policies should be selected with caution

"The sour economy is producing a bumper crop of cash-strapped consumers, business owners and shady agents who're fueling a wave of insurance fraud that's keeping regulators and law enforcement officials busy from coast to coast," McClatchy reports. "Whether it's worthless health plans peddled by fax, staged auto accidents, arson or slip-and-fall accidents at the local mall, insurance fraud of all kinds is booming in the recession and consumers are paying the price in higher premiums. … A recent survey of 37 state insurance-fraud bureaus by the Coalition Against Insurance Fraud found that the recession 'appears to have had a significant impact on the incidence of fraud' last year. On average, the bureaus reported increases in case referrals and new investigations in all 15 categories of fraud the survey covers" (Pugh, 3/11).

Meanwhile, U.S. News and World Report reports on short-term health insurance plans, "which are offered by many major carriers," and "typically afford coverage for six months to a year, though some are available on a monthly basis. They are generally intended to insure against the unpredictable—accident, injury, or illness—and are heavily marketed as ways for healthy people in life transitions to 'bridge the gap' between jobs, say, and prevent lapses in coverage." But while the plans tend to be cheaper, benefits are usually limited, and they "generally are very strict about pre-existing conditions and don't tend to cover conditions that became manifested during a certain period prior to the plan's start date." In addition, short-term plans are usually not renewable, so "[a]ny health problem that arose and was covered during the last short-term policy will now likely be considered a pre-existing condition and probably won't be covered—if the person is even accepted" (Lyon, 3/11).