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Could the Current Political Attack on Plan F Be Based on a Logical Flaw?

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Congress is considering making changes to Medigap due to the fact that high users of Medicare services tend to have Plan F policies. Ron Iverson of National Association of Medicare Supplement Advisors has been championing the fight to protect Medigap. He asked for comments back in a recent email (I’ve copied his email below). Following is my response to Ron, where I argue that the whole basis for “demonizing” Medigap could be based on a common logical flaw.


I thought pretty deeply about this issue and I’m afraid that the very basis of the argument may be a common flaw of logic referred to as “correlation does not imply causation.” A Wikipedia link explains this logical flaw.

An example in the article states, “The more firemen fighting a fire, the bigger the fire is observed to be. Therefore firemen cause fire.”

Obviously, this is a ridiculous statement.

I think the causation argument is similar with regard to Medigap Plan F: “The higher users of Medicare services tend to have a Plan F policy, therefore, Plan F INCREASES (or causes) utilization.” A more logically sound statement may be, “High users of Medicare services tend to have a Plan F policy because Plan F offers them the best value proposition.” If the latter is true, then the Medicare system would still be “burdened” with the high users of Medicare services WHETHER OR NOT a Plan F is available. Thus, high utilization and enrollment in Plan F are CORRELATED, however, one does not necessarily CAUSE the other to occur.


P.S. Thank you for your continued support of our industry.

Here is Ron’s original email:

“What You Don’t Know Can’t Help You”

1) Please take a look at our motto above. We have spent the better part of a month informing you of some important developments in our business. Please look back to your NAMSA Newsletters of July 20, July 27 and August 8.

2) There is a move on to change Medicare as we know it (soon) and Medicare Supplements as we currently know them.

3) Last Monday (August 8), I delivered access to two reports from AHIP that suggest there is no need to change Medicare Supplements. They provide assistance to our interests in Medicare matters which are sure to come before the new “Joint Select Committee on Deficit Reduction.” THERE IS AN URGENCY, since they will go to work almost immediately.

4) I asked each member to print and read the two studies. Then I asked you to respond with your views about NAMSA sending a letter to the committee and other Congress members regarding the changes which are sure to come under their consideration. So far, I have only received eight responses. That is embarrassing. This affects YOUR business, and I don’t think we should wait until Med Supp commissions have been cut in half before we act. I need your response yesterday. Just tell me to move forward with a letter which addresses our concerns.

5) YOU have a large stake in these developments (the barn door is open), so I need your help. Let’s start with the ammunition the two AHIP studies have given us. The whole study process will take about an hour of your time. I think that should be worth it, in comparison to what you have to lose by being apathetic.

Here’s how you get the studies:

1) Hit the link below.

2) You will be at the article.

3) Print it out.

4) In the third paragraph, you can hit the link for the “Trends in Medigap Coverage and Enrollment, 2010-2011? study.

5) Do so.

6) Print out the study.

7) Come back to the article.

8) Go to the bottom and hit the link for “Medicare Supplement (Medigap) Insurance: Myths and Facts.”

9) Print it out. Study it — it is powerful. Respond to me with a recommendation that we take action.

Here’s the link:

9.7 Million Beneficiaries Rely on Medigap for their Health Security New AHIP Report Finds
July 27, 2011
A new AHIP report shows that 9.7 million beneficiaries rely on Medigap for their health security. Continue reading ->

When I have sensible number of responses I will construct the letter, consult the board of directors, and prepare a letter which you can deliver to your Congress people and distribute to your associates.

“It was the best of times; it was the worst of times …” seems to fit us here. We have a great past in helping our customers, and we have a great future. We should work to keep it that way. As I quoted one of our members, Gizella Keating, last week, “I know that my clients need me now more than ever.”

Here’s another from one of the eight respondees, Howard Peck: “There are two constants that exist when I walk into folks’ homes. 1) A pile of brochures from insurance companies that they didn’t read. 2) A need for professional and honest assistance to help them make the best decisions, because they simply don’t understand the obscene complexity of Medicare.”

Well said. Great quotes! I need more ammo of this sort, so please respond.

We have politicians out there who want to remove the value of the agent in explaining insurance matters to their customers (as they were able to accomplish in group health insurance via PPACA) who could not begin to explain their own insurance coverage to themselves. This is backwards.

In the meantime, my best to all of us.

Ron Iverson, President and Executive Director
National Association of Medicare Supplement Advisors, Inc.

Craig Ritter is the president of Ritter Insurance Marketing. He can be reached at [email protected] or 800-769-1847, ext. 205. You can visit his blog at