Testimony Supporting HB 2118

Every Texan supports HB 2118. It will both cut down on the misleading information common in phone-sales of alternative health coverage and ensure TDI can take action against bad actors when a consumer files a complaint.

Reports from Texas consumers and research both show that people must wade through an alarming amount of misleading and deceptive information in the market for alternative health coverage products. As sales of alternative coverage have increased in recent years, so have reports of misleading and deceptive sales practices, generally through sales over the phone. Some alternatives rely heavily on telemarketing, using scripts designed to obscure the plan’s limited coverage or lead consumers to believe, incorrectly, that it is Affordable Care Act-compliant. Often these plans refuse to provide any details on benefits in writing until after a consumer signs up and makes a payment.

An alarming recent GAO report found that 1-in-4 secret shopper calls to sales reps for alternative plans included deceptive information serious enough to warrant referral to the Federal Trade Commission for investigation. In these calls, GAO staff posed as a consumer with a preexisting condition like diabetes who wanted coverage for that specified condition. In 25% of calls, GAO was told a plan would cover the preexisting condition, but the plan documents sent later said otherwise. In many of these calls, sales representatives refused requests to provide details on coverage in writing before a payment was made. Many sales also included several add-ons products, like memberships to associations and prescription drug discount cards, not discussed with the consumer.

Read our full testimony here.

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