Enzi Substitute Junk Insurance Bill Raises New Threats and Is Dishonest About Purported Fixes

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Washington D.C. — The nonpartisan Foundation for Taxpayer and Consumer Rights (FTCR) said that the substitute amendment offered by Senator Michael Enzi (R-WY) for his ‘association health plan’ legislation, S. 1955, creates new threats to patients and is dishonest about purported fixes to the bill. The substitute was introduced today in response to broad criticism about the bill’s pre-emption of state patient protection laws and is currently being debated on the Senate floor.

FTCR calls the the legislation “junk insurance” because under S. 1955, insurers could bypass state health insurance regulation and consumer protections to price employers and families out of their current health plans and replace them with inferior policies. Insurance companies would be allowed to sell this junk insurance to individuals and employers at higher rates based on gender, age and where they live.

“Insurance isn’t really insurance if it’s not there when you are sick,” said Jerry Flanagan of FTCR. “A policy that leaves insured patients with hundreds of thousands of dollars in unpaid medical bills isn’t really health insurance and the Enzi bill would make these policies the norm. In addition, this bill takes away remedies from individuals who have them today when their insurer denies their claims unfairly. That’s not a step forward, it’s a step back.”

Enzi Claim 1: The substitute does not shift oversight of insurers from states to the federal government.

Reality: In fact, the substitute takes away states’ ability to set strong insurer oversight rules and requires states to follow weak or non-existent federal standards.

Enzi Claim 2: The bill does nothing to limit a patient’s ability to “petition the state courts.”

Reality: The consumer may be able to petition a state court but the case would be removed to federal court where no damages are allowed even though today those who buy insurance on their own can sue in state court for damages. The bill, S. 1955, would extend the so-called “ERISA pre-emption” to any individuals who buy health insurance through associations. As a result, individuals who purchase these health insurance plans will loose their right to sue for damages if they are harmed by an insurer’s decision to limit access to medical treatments.

Dana Christensen, of Playa Del Rey California, successfully sued her health insurer under state fraud laws when her association health plan misrepresented the benefits provided and left her with over $450,000 in unpaid medical bills when her husband died of bone cancer. Under S. 1955, individuals like Dana Christensen could not hold insurers accountable in state court and insurance companies would be protected from paying damages to patients they defraud. For more information visit:

For more information about Dana Christensen visit:

Already, patients who receive health coverage through a private employer cannot sue for damages in state court as a result of a 1987 Supreme Court decision in Pilot Life Insurance v. Dedeaux which concluded that: “State common law causes of action arising from the improper processing of a claim are preempted.” The Enzi bill would extend the Pilot Life decision to include individuals who buy health insurance on their own and are now not subject to it.

Enzi Claim 3: The so-called “harmonization” standards pre-empting state laws only address “mechanical aspects of health insurance regulation and not consumer protections.”

Reality: Enzi claims that changes to his bill remove pre-emption of state consumer protection laws. In fact, the substitute bill’s “harmonization standards” would pre-empt state market conduct exams, prompt payment of claims requirements, and a patient’s ability to appeal an insurer’s decision to deny necessary medical care (Title III Section 2933(b)(6)).

“Market conduct exams” under state control allow local regulators to investigate insurance company practices that harm patients. For example, the California Department of Managed Health Care (DMHC) used this power to investigate Kaiser‘s error-ridden kidney transplant clinic that put hundreds of patients at risk.

The Christensens’ insurance company, Mega Life and Health, is currently the subject of half a dozen civil lawsuits in state courts, as well as multi-state investigations by state regulators — called “market conduct exams” — into their business practices.

New Threats Appearing in Enzi Substitute

The substitute bill removes protections against insurer control of a “small business” or “association” health plan by removing a requirement that employers elect representatives to the oversight board that administers the health plan (Title 1, Section 103(b)(1)(C)). As result, insurers could design insurance policies that guarantee their profits but offer no protections for patients when they get sick. Employers would not be allowed to intervene on their workers behalf.

Fundamental Flaws of S. 1955 Remain

S. 1955 ——— S. 1955 Substitute

Pre-empts States’ Ability to Regulate Health Insurance
Yes —————— Yes

Allows Business Associations to Profit from Selling Insurance
Yes —————— Yes

Blocks Patients’ Ability to Recover Damages when Defrauded
Yes —————— Yes

Removes Regulators’ Ability to Investigate Kaiser Kidney Transplant Scandal
Yes —————— Yes

Allows Cherry-Picking of Healthy Patients
Yes —————— Yes

Allows Insurers to Charge More Based on Age and Medical Histories
Yes —————— Yes

Allows Insurers to Sell Junk Coverage w/out License
Yes —————— Yes

Creates Epidemic of Underinsured By Pre-Empting State Coverage Requirements
Yes —————— Yes

On Friday, the national PBS program “NOW” debuted an exposé on S. 1955. View a resource page for the NOW program, “Payment Due,” complete with a photo essay, “Barely Covered,” and an analysis of the bill at:

Read a transcript of the program.

Watch the NOW program.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is California’s leading nonpartisan consumer advocacy organization. For more information, visit us on the web at:

Consumer Watchdog
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Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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