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July 27, 2004 at 08:00 PM
Federal regulators say the new Medicare prescription drug benefit could hurt insurers that sell private Medicare supplement insurance.[@@]
The new drug benefit could affect 1.9 million U.S. resident who already have Medigap drug benefits, and it might cost the Medigap insurers as much as $2.5 billion in revenue in 2006, regulators write in a discussion that accompanies a package of proposed Medicare drug benefit program regulations.
Medigap sellers reported a total of about $17 billion in Medigap revenue in 2002, according to the National Association of Insurance Commissioners, Kansas City, Mo.
The effect on private Medigap insurers could swell to $3.2 billion in 2010, the regulators predict.
But the regulators are hoping that the insurers that sell Medigap coverage will reap some gains from other statutory changes in the Medicare program. If the insurers that sell Medigap jump into the new Medicare drug benefits and Medicare preferred provider organization markets, “this market entry might mitigate the revenue impacts on these insurers, and could even possibly produce a revenue gain for these insurers,” the regulators write.
The regulators say they are basing their projections on NAIC data.
On Monday, the Centers for Medicare and Medicaid Services, an arm of the U.S. Department of Health and Human Services, posted more than 2,000 pages of regulations and related discussions pertaining to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 on the agency’s Web site.
The agency has designated Julie Walton and Kathryn McCann as the contact people for questions about the Medigap provisions.
