This month's glitch-filled rollout of the health insurance marketplaces created by federal law is a business opportunity for brokers and agents, but regulators warn that it also opened the door for those who would seek to line their pockets by misleading consumers.
New Hampshire's insurance commissioner sent a cease-and-desist letter last week to an Arizona company he accused of building a website to mislead health care shoppers into thinking it was the official marketplace. The site was taken down Friday.
Regulators in Washington state and Pennsylvania also have told agents to change websites that seemed likely to convince consumers they were connecting to government-run sites. Connecticut's insurance department warned agents and brokers this summer that it will take action against agents who mislead consumers or design sites to replicate the state-run exchange.
An organization run by the top insurance regulators in each state recently issued an alert on the potential for scams related to the marketplaces. The National Association of Insurance Commissioners advised consumers that bogus sites have been spotted and warned people to beware of unsolicited calls by people claiming they need personal information to help them enroll in insurance.
Not all insurance agents are licensed to sell insurance on the exchanges, and buying a policy from one of them could leave consumers without the tax subsidies that make the health insurance affordable. Consumers who seek an insurance professional's help are urged to make sure they know who they're dealing with.
"We all need to be on the lookout right now. We don't want consumers to get confused," said Jessica Waltman of the National Association of Health Underwriters, a trade association representing agents and brokers.
Susan Johnson, the Northwest regional director for the U.S. Department of Health and Human Services, said while some brokers are passionate about helping, others are seeking to take advantage.
In one such case, a state-licensed broker in suburban Seattle bought the domain name washingtonhealthplanfinder.org and built a website with fewer computer glitches than the state's new health insurance marketplace, wahealthplanfinder.org. The brokerage's site told customers: "Welcome to the Exchange!" in big print until the state insurance commissioner asked for changes to avoid confusion.
"You don't want to go to the wrong portal," Johnson said.
The insurance broker, Jeff Lindstrom, said he thought he was being creative when he bought 40-50 domain names to bring in new customers. He said he is not trying to confuse the public. Lindstrom's toll free phone number was also very close to the official call center number, said Stephanie Marquis, a spokeswoman for Washington's insurance commissioner.
In New Hampshire, newhampshirehealthexchange.com offered free price quotes on insurance, but it wasn't affiliated with the state or the federal government, which is running New Hampshire's official online market. The site was taken down days after the state sent a cease-and-desist letter.
"It put itself forward as offering health insurance through the exchange, and consumers are naturally misled by that into thinking it's the government site," said Deputy Insurance Commissioner Alex Feldvebel.
The insurance department took action after getting a complaint from a small-business owner who called a phone number on the misleading site.
"He called and ended up talking to someone who said, `Unless you make a choice today, the price is going to go up,"' Feldvebel said.
A man who answered the phone declined to comment at the company identified as running the site, Arizona-based Steffen Financial.
In Pennsylvania, a consumer law group this summer tipped off regulators about a licensed broker's website that featured a logo mimicking the state seal and telling visitors: "Welcome to the Pennsylvania Health Exchange!" The broker took down PAhealthexchange.com a day after the state insurance department's enforcement bureau called.
The top online search result using the terms "Texas health insurance exchange online" is for Texas Health Insurance Exchange, which sells unsubsidized insurance policies. The broker who owns the website is Scott Thiltgen, a state-licensed insurance agent in Cedar Park, Texas. He said he's also marketing on his Facebook page, Texas Health Insurance Marketplace.
Thiltgen said he's not out to confuse consumers.
"It's basically there to have someone they can talk to that knows about the exchange," he said.
He said he's earned the federal certification needed to sell subsidized policies on exchanges, and plans to start once the federal marketplace sorts out its glitches.
"Right now I've got a list of people that are ready to sign up for subsidized exchange plans, but can't," Thiltgen said.
While regulators have warned consumers, they don't have any reports of people being cheated. The National Association of Insurance Commissioners and state agencies in Pennsylvania, Virginia and North Carolina report no complaints since the marketplaces launched on Oct. 1.
Those with industry experience warn whenever there's money and confusion, consumers should be alert. Fraudsters saw opportunities when Medicaid Part D prescription drug insurance plans hit the market a decade ago, said Waltman, of the agents and brokers trade association.
"I think that we have to be concerned that this has happened a variety of times in the past," Waltman said.
The first line of defense is checking whether a broker or agent is licensed by the state insurance department where they operate. Usually that can be done online.
The federal Centers for Medicare & Medicaid Services doesn't have a similar option to check whether an agent has completed training necessary to work for consumers on a federally run exchange. The federal agency recommends consumers ask agents to provide a copy of the certificate showing they've completed training.
Some states that operate their own exchanges plan to identify marketplace-certified brokers, but that has not yet happened in all states, leaving a temporary gap for consumers. More than 2,600 state-licensed brokers cleared to work on New York's exchange were expected to be listed on its website soon, the state's health department said.
Still, spreading the word that subsidized health insurance is available and explaining how consumers should buy it leaves a legitimate role for brokers, Waltman said. Brokers earn commissions paid by insurance companies and not consumers.
Some brokers are under pressure to add customers because the commissions they earn on each policy are shrinking as the law rolls out.
Boise, Idaho, insurance agent Tom Shores estimates he'll need to pick up 3,000 new customers to offset commissions cut to about $9 per policy each month. Shores estimates a quarter of his brokerage's 4,000 existing health insurance customers also might learn they're eligible for Medicaid, the government insurance for low-income people, once they enter their financial data into the exchange system.
"The only way we're going to make money is to get more people," Shores said late last month.
The two largest companies on South Carolina's exchange are paying commissions of about $28 per policy per month for the first year, dropping to $14 a month after that, said John Adair, a broker in Greer, S.C.
"The law is complicated and making any sort of insurance purchase can be complicated -- which plan to choose, deductibles, coinsurance, co-pays, network of providers," said Adair, who built a website and licensed his business in states nationwide to capture new customers. "With what we're seeing with the federal exchange, and some of the glitches, the agents themselves are very much in high demand."