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.