The Truth About "Discount Health Insurance"
The term "discount health insurance" is a violation of state market conduct laws. This is because advertising that gives a false impression to consumers is illegal in all states. Because insurance rates are set by state regulation, the price of insurance premiums may not be discounted by any insurer. Therefore, medical coverage advertised as "discount health insurance" gives consumers a false impression, and is against advertising compliance regulations for insurers.
"Discount Health Insurance" Continues to Be Used in Insurance Marketing
Yet, the term "discount health insurance" continues to be a popular phrase in marketing to small businesses and Internet consumers who are looking for low-cost health insurance coverage.
Internet use of the term "discount health insurance" is primarily driven by consumers who type this term into Google and other search engines. Any popular search engine term, regardless of its legality or appropriate use, has significant market value.
Furthermore, Internet marketers who are not connected to the insurance industry can often avoid prosecution because their marketing efforts are not scrutinized by regulatory agencies.
Discount Merchandise or Services
Consumers who demonstrate a high level of sophistication when shopping for other products, such as electronics, sometimes believe that the same bargain shopping rules apply to health insurance.
If you shop for discount merchandise, you know that some retailers can offer the same product at a significantly reduced price. You may assume that the same is true for health insurance, but because rates are determined by state regulation, insurers cannot offer discounted rates.
Discount Health Insurance May Provide Poor Coverage
Those who look for discount health insurance may find that they are unhappy with their coverage when they try to file a claim. This is because higher priced health insurance satisfies policyholders, while lower-priced insurance generates more complaints.
Consumer Reports consistently reports that consumer satisfaction with health insurance is related to the price of the coverage--meaning those who pay higher premiums are more satisfied with their coverage.
The same trend can be observed in health insurance complaint reports generated by the National Association of Insurance Commissioners (NAIC). Higher priced health insurance satisfies members, while lower-priced insurance generates more complaints.
The only differences between insurance rates are the different levels of benefits provided. A health insurance policy with significantly lower premiums provides fewer benefits.
In this situation, the adage "buyers beware" may be more effective than government regulators. A buyer should consider abandoning any health insurance that is marketed using the term "discount health insurance."