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It is estimated
that health insurance fraud accounts for at least
10% of the annual expenditure on health care in
the United States. Studies show that a 1% rise
in insurance premiums results in approximately
400,000 more people nationwide who cannot afford
health insurance at all.1
In addition to health care insurance fraud, auto
insurance fraud costs the insurance industry an
estimated $14 billion each year. National figures
estimate that Workers’
Compensation fraud accounts for $2.1 billion of
the total fraud problem. Medicaid fraud costs New
Jersey taxpayers millions of dollars each year.
Still other areas of insurance fraud include collecting
illegal unemployment insurance benefits, collecting
illegal Social Security disability benefits, collecting
on false homeowners’ property damage, buying
or selling fake automobile insurance identification,
identity theft, and many other types of insurance
fraud. All of this is paid for by every New Jersey
employer and every New Jersey resident.2
Insurance fraud is the second most costly "white
collar" crime. It is exceeded only by tax
evasion. People of all races, incomes, and ages
are victimized. The Coalition Against Insurance
Fraud estimates that insurance fraud costs Americans
$80 billion a year. Each family pays nearly
$950 in added expenses each year; there is also
an increase of $200 to $300 in insurance premiums
for the average household.3
Insurance fraud is an $80 billion a
year crime wave. What does that really mean?
Yes, it translates to higher premiums and a higher
cost of goods, but in another context, $80 billion could also:
- Fund the entire United
States space program for five years.
- Buy more than twice
the gold stored at Fort Knox.
- Pay the college tuition
for 12 million undergraduate students each
year.
- Fund AIDS treatment,
prevention, and research for the next eight
years.
- Make insurance fraud a “Fortune
10” Corporation, if fraud was a company
Therefore, in the State
of New Jersey as well as in other states, there has
been a push for consumer education. This includes
an advertising campaign geared to create public awareness.
Tips are given on how to detect fraud, as well as
how to report fraud. The messages put out to the
public stress simple themes:
- Insurance fraud is
a crime
- Everyone pays a high
price
- Getting caught has
heavy consequences
- There is a strong likelihood
of getting caught
Footnotes
1New Jersey Department of Law and Public
Safety, New Jersey Office of Insurance Fraud Prosecutor,
2001 brochure, and also U.S. General Accounting
Office (GAO)
2Based on facts
from: New Jersey Department of Law and Public Safety,
New Jersey Office of Insurance Fraud Prosecutor,
2001 brochure, and also Coalition Against Insurance
Fraud (CAIF), Insurance Fraud: The crime you
pay for, 2002 Web site article
3Based on
facts from: National Insurance Crime Bureau (NICB),
June 2002 Web site and also: New Jersey Department
of Law and Public Safety, New Jersey Office of
Insurance Fraud Prosecutor, 2001 brochure
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