PROVIDENCE – Rhode Island is taking steps to regulate a slew of “affordable health care plans” and other products that are advertised to look like insurance, but really are not.
The House of Representatives has passed a bill, sponsored by Rep. Brian Patrick Kennedy, D-Hopkinton, that sets standards for “discount medical plan organizations” and requires them to register with Health Insurance Commissioner Christopher F. Koller’s office.
To protect consumers from “unfair and deceptive marketing practices,” the bill would also bar the plans from making any “misleading or deceptive representations” in ads, marketing materials or brochures directed at prospective members, according to a Kennedy news release.
“Medical discount plans can be useful to some, but they are not health insurance,” Kennedy said in the release. “They don’t pay any of a plan member’s health care costs. Instead, the member is required to pay a fee for a list of health care providers and sellers of health-related products who are willing to offer discounts to members of the plan. Often, the plans make exaggerated claims about discounts and provide inaccurate information on how to cancel.
“In short,” he added, “consumers may be spending a lot and getting next to nothing in return, and certainly not health insurance coverage.”
The Federal Trade Commission has issued a consumer alert about the discount medical plans, and 34 states have enacted laws to regulate medical discount plans, with 18 of those states requiring a form of licensure or registration, Kennedy said.
This bill, which was written with input from the Consumer Health Alliance, will benefit Rhode Islanders by setting license standards and giving Koller’s office “the tools it need to protect consumers,” Kennedy said.
“The legislation will protect consumers and allow legitimate programs to operate in the state,” he said. “The bill’s language is targeted to specifically address the key programs that have emerged, from fly-by-night companies with deceptive marketing practices and inadequate consumer protections.”
The bill now goes to the Senate for consideration. An identical bill, 2010-S 2632, has been introduced by Sen. James C. Sheehan, D-North Kingstown, and is currently before the Senate Committee on Health and Human Services.
The full text of Kennedy’s bill is available here.
