During his 2020 State of the Department speech, then–Secretary of Health and Human Services Alex Azar made a curious reference to his TV viewing habits. “If you watch a lot of cable news,” he said, “you may have seen frequent communications and commercials talking about how Medicare beneficiaries can call a 1-800 number to inquire about whether they’re eligible” for new benefits. He continued: “One particular ad looks a bit like something out of the 1990s with red, white, and blue graphics, and to complete the picture there’s an NFL star from the 1960s involved.” The helpline may not “look or sound like the future of health care,” Azar said, but he avowed that it represented “real savings, real options” for seniors.
The TV campaign, which first aired in 2018 and stars 78-year-old Joe Namath, is for the Medicare Coverage Helpline. With a crinkled smile, Namath lists a handful of health care benefits—from no co-pays to home-delivered meals—intended to attract callers on Medicare. The kitschy campaign reaches peak saturation each year during the annual open enrollment period, with newer ads featuring Star Trek’s William Shatner and Jimmie Walker from Good Times.
The commercials pitch Medicare Advantage plans as an alternative to traditional Medicare, the popular public insurance program for seniors and certain people with disabilities. They offer extras, such as dental, vision, and hearing services, and prescription drug coverage. In the first half of 2021, around 42 percent of the Medicare population—roughly 26 million out of 62.7 million medicare beneficiaries—opted for Advantage plans, which also tend to have lower premiums.
At first glance, Medicare Advantage seems like a savvy choice, but Namath doesn’t specify that benefits vary by state and sometimes even by county. There are other pitfalls, too. If you live in a rural area or become seriously ill, for example, you may not be able to access the medical services you need without paying out of pocket. Researchers have found that aside from the financial risks, choosing the wrong plan can literally knock years off your life. Many Medicare Advantage plans are offered by big-name insurance companies, such as Humana, United Healthcare, or Aetna, but others come from newer entrants to the increasingly cramped marketplace. In 2021, the average Medicare beneficiary had access to 33 options.
“Making decisions about Medicare can seem daunting,” said Kathy Stokes, the director of fraud prevention at AARP Fraud Watch Network, in an email. “A lot of bad actors are out there looking to take advantage of people’s uncertainty. Be skeptical of ads, mailings, and emails offering discounted prescription drug plans or supplemental Medicare coverage.”
Whether Namath, whose long football career likely left him with Medicare subsidies, has any idea what he’s hawking is unclear; he’s not interested in talking about it. Or so says his longtime agent, Jim Walsh. “I’m just a lawyer,” Walsh said when he politely told me he wasn’t “in a position to chat” about his client’s contract. So who is behind the aging-star-spangled hotline? TogetherHealth, a Florida-based insurance marketing firm, and its parent company, Benefytt Technologies, which is far less clean-cut than its all-American spokesman. Benefytt’s evolution offers a dizzying tour through the world of insurance brokers wading into consumer confusion to sell often subpar plans. Seniors are only one target.
In the summer of 2019, Gavin Southwell was in New York with some of his senior staff, having traveled from Tampa, Florida, where he’s the CEO of a company that creates online platforms for selling insurance. Before it rebranded in 2020 to Benefytt Technologies, the company was called Health Insurance Innovations, and the team was headed to Nasdaq Tower in Times Square to ring the opening bell of the trading week.
Inside a glass-walled television studio on the ground floor, David Wicks, a vice president at Nasdaq, called Southwell to a podium. “Gavin, sometimes the louder the group claps and cheers, the more the stock goes up,” Wicks said, amid cheers from the besuited audience. Clapping along like a gameshow host, he congratulated the visiting CEO on his company’s recent acquisition of TogetherHealth. The new subsidiary’s Medicare Coverage Helpline, established in 2017, would enable Health Insurance Innovations to connect seniors with health insurers. (TogetherHealth’s website currently claims to “partner with the nation’s leading Medicare carriers,” including Humana, Aetna, and WellCare.)
Since its founding in 2008, Health Insurance Innovations had rapidly expanded its operations, providing online sales platforms for a byzantine network of third-party insurance brokers, alongside its own direct-to-consumer operations. For years, most of the brokers working under the company’s umbrella sold health and life insurance products unrelated to Medicare. Particularly popular were short-term health insurance plans—a low-cost option for bridging brief gaps in coverage. Because short-term health insurance plans are meant to be just that—short-term—they’re exempt from the minimum coverage standards of the Affordable Care Act, a detail that brokers tended to downplay.
When customers, saddled with unpaid medical bills, began to suspect a grift, the ambiguous legal arrangement caught the attention of regulators. In time, even some investors sued Health Insurance Innovations for shirking its compliance responsibilities, although the company attempted to distance itself from the brokers making the sales on a day-to-day basis. What these investigations and lawsuits turned up confirmed the complaints. Brokers had indeed failed to disclose the limited nature of the coverage they were selling.
Health Insurance Innovations’ “model is very unique because there are many layers between them and the consumer,” said Tyler Robbins, a former investigator in the Washington state insurance commissioner’s office, who was part of the state’s investigation into the company. “There is nothing inherently sinister about an arrangement like that, but it does make it difficult when you can’t draw a straight line.”
Washington was one of 43 states to probe the company’s sales and marketing practices, starting in 2016 and ending in a $3.4 million multistate settlement (in which the company did not admit any wrongdoing). When the Obama administration tried to restrict the sale of short-term health insurance plans, Health Insurance Innovations’ share price plummeted to an all-time low of around $4.
Just months later, though, a reprieve arrived in the form of Donald Trump. With his election, the company’s stock rebounded, jumping 166 percent by the end of 2016. In February 2018, shortly after Azar took the reins at the Department of Health and Human Services, the new administration proposed to extend the maximum length of the plans—previously capped at three months—to one year, with the option to renew. (Insurers were told to alert consumers to what was and wasn’t covered under the new policies, but no additional oversight occurred.) Health Insurance Innovations’ share price soared above $60 for the first time, according to the Tampa Bay Times.
By June 2018, the company announced record second-quarter revenue and was listed atop Fortune’s ranking of the fastest-growing U.S. companies. On an early morning earnings call soon afterward, Southwell predicted even higher revenues to come, with the Trump administration’s laxer limits on short-term health insurance plans in the pipeline. “The new rule will not only benefit many consumers,” Southwell told analysts on the call, “it will also provide potential significant upside to our business.”
The prediction proved overly optimistic. That November, the Federal Trade Commission temporarily shut down Simple Health, a company based in Hollywood, Florida, that was one of the most profitable third-party brokers in the Health Insurance Innovations stable. The regulator accused the broker of selling “massively deceptive” insurance policies, leaving potentially hundreds of thousands of customers—who paid up to $500 a month—effectively uninsured. Meanwhile, Simple Health had pocketed over $100 million.
Earlier that year, in March 2018, Steven Dorfman, a baby-faced businessman with sculpted facial hair befitting a member of a 1990s-era boy band, had married his blonde fiancée, Izabela Freitas, in a glamorous ceremony at St. Regis Bal Harbour Resort in Miami Beach, Florida. Wedding photographs, which later surfaced in the media, show Dorfman and Freitas with a Lamborghini and a Rolls Royce and a seven-tier cake. Dorfman owed his luxe nuptials to the success of Simple Health, where he served as CEO.
Dorfman had an unusually tight relationship with Health Insurance Innovations, which had provided him with around $118 million in business loans for various ventures. Simple Health also received around $83 million in commissions from Health Insurance Innovations between 2017 and 2019. Around the time of Dorfman’s wedding, his company was pulling in over $40 million annually.
In October 2018, the FTC filed a lawsuit against Dorfman and several companies under his control, including Simple Health. In court filings, the regulator accused Dorfman of orchestrating an elaborate “bait and switch” scam to squeeze vulnerable consumers to bankroll his lifestyle. According to the FTC findings, Dorfman “siphoned millions of dollars of proceeds from defrauded consumers to pay for private jet travel, gambling sprees in Las Vegas, the rent for his oceanfront condominium, luxury automobiles, over $1 million in jewelry, and even the nearly $300,000 cost of his recent wedding.”
The FTC declared Dorfman the “mastermind” behind Simple Health’s telemarketing scheme. The company, the FTC said in court papers, paid Google to direct users searching terms such as “Obama Care” or “Obama Care Insurance” to its lead-generating websites, which were designed to dupe visitors into thinking they were buying comprehensive health insurance, compliant with the Affordable Care Act. Instead, they got, as the FTC put it, “practically worthless” plans.
Health Insurance Innovations repeatedly denied any involvement, claiming that Simple Health had duped them, including to a congressional committee, which later investigated the company’s ties to Simple Heath. The committee declared it “highly implausible” that Southwell was unaware of Dorfman’s fraudulent scheme, and the relationship continued to dog him. In February 2021, a federal judge greenlit a major class-action lawsuit on behalf of over 200,000 consumers, which recently settled for $27.5 million. As part of the settlement, Health Insurance Innovations agreed to change certain practices to strengthen compliance.
In summer 2020, the U.S. House of Representatives Committee on Energy and Commerce released a damning report containing the findings of an almost 18-month investigation into short-term health insurance plans during the Trump presidency. The committee declared that the plans systematically discriminated against people with preexisting medical conditions and offered “wholly inadequate protection against catastrophic medical costs.”
Health Insurance Innovations was singled out in the report, which counted as many as 14,000 third-party agents and brokers across 40 states tied to the company as of September 2019. The committee reviewed hundreds of complaints lodged with the Better Business Bureau, which awards the company a D, and concluded its commissions structure incentivized brokers to “actively deceive and deliberately mislead consumers.”
But even as the congressional committee was investigating, Southwell had begun steering his company toward a new product line with the acquisition of TogetherHealth, the Namath-touted Medicare Advantage vendor. Health Insurance Innovations also spent likely millions of dollars on the domain HealthInsurance.com, a website with a generic URL sure to drive consumers the company’s way, and developed a mobile app and online portal called MyBenefitsKeeper, which lets customers directly buy insurance products.
A month after the committee report was released, Laurie Barbier, a single mother from Georgia, shared her troubling experience using the app: “SHUT DOWN THIS COMPANY,” she posted on the Better Business Bureau website. She told me she found the app through Google after the sudden death of her husband in late 2018 left her and her young daughter uninsured. Barbier said she was paying a monthly premium of about $500 for a plan with a 15 percent co-pay when she had “a full blowout” of her knee after colliding with her nephew on a trampoline. The insurer paid for two visits to a physical therapist and, Barbier said, agreed to cover a little over half the cost of a $40,000 surgery. When Barbier sought the promised reimbursement, she was told her plan “didn’t cover both tendons” in her knee. “It only covered one,” she said. “I’m the kind of person that pays my bills. I can’t pay that bill.”
The company’s regulatory headaches persisted along with customer complaints. At the start of 2020, it was fined $1.5 million for flouting Washington state insurance laws over 50,000 times. “These aren’t just esoteric violations of some obscure statute,” Robbins, the former Washington insurance investigator, told me. A few months later, the company paid $11 million to settle a lawsuit brought by investors who claimed Southwell and another executive had defrauded them by, among other things, branding Health Insurance Innovations’ regulatory compliance “best in class.”
In March 2020, the company changed its name to Benefytt Technologies and, a few months later, was sold to Madison Dearborn Partners, a Chicago-based private equity firm, in a deal worth an estimated $625 million. Just a year after the Nasdaq feted Southwell for his company’s success, it had totally rebranded and delisted from the exchange.
Regulators found it arduous enough to investigate the company before, but the constant reinventions have made it even harder to keep tabs on. A spokesperson from the National Association of Insurance Commissioners compared monitoring it to playing regulatory whack-a-mole. Benefytt, TogetherHealth, Southwell, and Madison Dearborn either declined to speak with me or did not respond to repeated requests for comment.
At least 20 different iterations of the Joe Namath ad have appeared on TVs across the United States since the summer of 2018. Since the start of 2020, versions of the ad have been seen over 7.7 billion times. One recent ad seeks to capitalize on the pandemic, with Namath citing “the uncertainty of the coronavirus and vaccines” as a reason to reconsider your Medicare coverage.
Despite pivoting toward Medicare, the Benefytt business model seems largely unchanged. In its final annual shareholder report before going private, the company explained that its revenues relied heavily on a network of insurers that use its brokers and platforms to sell their insurance products. At least half of all Medicare beneficiaries nationwide are expected to be enrolled in Medicare Advantage plans by 2030. For companies like Benefytt, “it is literally a gold mine,” said Diane Archer, the founder of health care watchdog Just Care USA.
Trudy Lieberman, a journalist who has been covering the U.S. health care system for decades, has long argued Medicare Advantage is a key part of the “long crusade to privatize Medicare.” The public program, signed into law by President Lyndon B. Johnson in 1965, has been chipped away at by successive administrations hoping to put more of the cost of health care on seniors themselves. Lieberman also pointed out that lower-quality Medicare Advantage plans are disproportionately sold to Black and Hispanic Americans, particularly those living in poorer neighborhoods. “Joe Namath comes on the TV, and they know him because of football,” she said. “And they say, ‘He can’t be wrong—I want one of those plans.’ It’s really clever marketing. Pernicious.”
The Medicare Coverage Helpline has no ties to the Centers for Medicare and Medicaid Services, the government agency that oversees Medicare. “CMS does not review or endorse the information these companies disseminate,” an agency spokesperson said, declining to confirm if it had received specific complaints about the hotline. Ultimately, the spokesperson implied, beneficiaries must decide whether to sign up to a Medicare Advantage plan themselves.
“People are really operating in the dark,” Archer said. “They should be able to know that if they pick a plan, and they get heart disease or cancer or other costly conditions, they will be able to get the care they need.” Thanks to muddling marketing, too many people can’t be sure.