In all the debating about health insurance over the past two years, issues of consumer access and allowing pre-existing conditions have been at the forefront of the discussion.
One aspect that’s been much less reported is the issue of insurance fraud. Recently, I read some eye-popping statistics from the Coalition Against Insurance Fraud (CAIF). This not-for-profit organization estimates that the level of annual insurance fraud amounts to the equivalent of ~$950 for each household in the United States.
Moreover, the Insurance Information Institute estimates that fraud accounts for ~10% of the losses in the property and casualty insurance segments, while the National Health Care Anti-Fraud Association reports that ~3% of the U.S. health care industry’s expenditures are due to fraudulent activities.
So we’re not talking chump change.
Insurance fraud to the tune of $80 billion per year doesn’t happen just because of a few bad apples out there. What’s happening is far more serious than that. Indeed, there are highly organized fraud rings operating throughout the country engaging in everything from staging dangerous accidents to setting up bogus medical services.
The problem goes beyond merely the added cost being borne by consumers. CAIF contends that lives can be endangered, too, due to staged auto accidents, arson incidences, and “medical procedures” being performed by phony physicians.
Is it any wonder that insurance companies like GEICO have well-staffed special investigations units devoted to ferreting out illegal insurance activities wherever they can find them.
Insurance fraud has surely been a problem since the dawn of time, because at its heart is the opportunity for financial profit. In response, a plethora of national and state laws aimed at controlling fraudulent activities have been on the books for years (although surprisingly, insurance fraud is a crime in just 48 of the 50 states – what is it about Virginia and Oregon, I wonder?). Most states maintain their own fraud bureaus as well.
But like so much else the government tries to control or influence, all of these earnest efforts to stem fraudulent activities don’t seem to be adding up to much or getting us closer to a fraud-free world.
Now here’s an idea: Let’s pass some more anti-fraud laws!