Masked insurance bandits returned to Capitol Hill yesterday with tales of elderly widows bilked out of thousands of dollars for premiums on worthless or overlapping supplemental health policies.
Agents X and Y, in blue and purple ski masks respectively, told the House interstate and foreign commerce subcommitee on health how they-and three-quarters of their competitors-preyed upon lonely senior citizens.
They said they exploited old people's fears of debilitating illnesses, selling and reselling policies they knew would never fully bridge the gap between Medicare and actual medical cost.Sometimes as little as 14 cents on each dollar paid in premiums was returned in benefits.
"I didn't have a conscience in those days; I was a thief," declared Agent X, who said he is going straight. "I hope my testimony will serve to make amends," echoed Agent Y, also appeared contrite.
The histrionics were calculated to focus maximum attention on "a mild and very timid" bill, as it was characterized by its sponsor, Rep. Claude Pepper (D-Fla.) The legislation evolved out of hearings held in November 1978 during which other masked men related similar horror stories. The bill invites insurance companies to submit their Medigap policies to the federal government for a kind of Good Housekeeping Seal of Approval.
Pepper said the idea is to "exert a wholesome federal influence" by giving a competitive advantage to the companies selling the best policies. Several subcommittee members expressed skepticism that Pepper's voluntary remedy packed enough punch to put insurance bandits out of business.
On the other hand, Pepper's tonic was too much for the industry to swallow. Edward J. Birrane, Maryland state insurance commissioner, said the National Association of Insurance Commissioners rejected the proposals.
The Pepper bill also would make it a federal crime-punishable by a $25,000 fine or up to three years in prison-to knowingly sell a duplicative insurance policy. Just as the certification program would not keep unscrupulous agents from selling worthless policies, this provision could be flouted easily by an agent never asking if the customer owned another policy, said Blue Cross and Blue Shield Associations Vice President David H. Klein.
A companion bill calling for minimum standards for health insurance for the elderly has been introduced by Rep. William Brodhead (D-Mich). The minimum standard, which states could adopt, would return 65 cents on the premium dollar in benefits on single policies and 70 cents for group policies.
The masquerade drew some criticism from Rep. Henry Waxman (D-Cal.)
He asked Agents X and Y why they were hiding their faces. They said it was not because they feared harm from other agents, but because they are alcoholic who fear embarrassing other alcoholics they now counsel. Also, their experiences were 10 years old.
After the hearing, they told reporters their estimate of 75 percent bandits in the industry was probably too high because they were drinking heavily at the time "and the people you know then tend to be in the gutter, too." CAPTION: Picture, J. Gusty Yearout (left), a witness; Agent Y; Rep. Claude Pepper; and Agent X at subcommittee hearings yesterday. By James K. W. Atherton-The Washington Post