The National Association of Insurance Commissioners (NAIC) is about to mount a fierce battle to defend the Medicare supplement insurance program against any efforts to cut coverage or revamp plan design.

The NAIC, Kansas City, Mo., is preparing to send members of Congress a letter warning of dire consequences to seniors and extreme marketplace disruption if budget cutters tamper with Medigap.

The NAIC Health Insurance and Managed Care Committee talked about the letter Monday during a conference call that was arranged to take the place of a session originally scheduled to occur in Philadelphia at the NAIC’s summer meeting. The meeting was canceled as a result of Hurricane Irene.

Members of the Joint Select Committee on Deficit Reduction – the 12-member “Super Committee” that is supposed to find $1.2 trillion in deficit reductions by Thanksgiving – have sparked debate about Medigap by talking about proposals for eliminating or restricting the ability of Medigap plans to provide “first-dollar” coverage for Medicare enrollees.

About one in five Medicare enrollees has Medigap coverage, according to the Henry J. Kaiser Family Foundation, Menlo Park, Calif.

Enrollees use the products to handle the co-payments, deductibles and coinsurance amounts imposed by the cost-sharing arrangements built into the Medicare Part A hospitalization program and the Medicare Part B physician services program.

Critics of first-dollar coverage say it encourages Medicare enrollees to get care that may not really be necessary; advocates of keeping current Medigap plans as is say first-dollar coverage can reduce financial hardship and, in some cases, encourage seniors to get the care needed to prevent minor problems from becoming big problems.

One of the most vocal opponents of efforts to change Medigap program rules, Florida Deputy Insurance Commissioner Mary Beth Senkewicz, told other regulators on the call that she is extremely concerned about the effects of any changes on policies that are already in force.

Senkewicz, whose boss, Florida Insurance Commissioner Kevin McCarty, chairs the Senior Issues Task Force at the Health Committee, said changes affecting in-force policies could shift costs to seniors who have not prepared for such expenditures, cause “major market disruptions,” and lead to legal issues such as impairment of contracts and due process problems.

Even on a prospective basis, eliminating Medigap first-dollar coverage would shift more costs to seniors, call participants said.

Defending Medigap first-dollar coverage is one of those issues where everyone – consumer groups, the insurance industry and regulators – are all on the same table, Senkewicz said.

Senkewicz, who worked on health policy issues for the NAIC in Washington for more than a decade, said she thinks the threat of budget cuts affecting the Medigap program is serious.

The Congressional Budget Office has estimated that prohibiting Medigap from paying any first-dollar coverage for any enrollee starting in 2013 and limiting Medigap coverage to 50% of the next $5,000 in Medicare cost sharing would save $3.7 billion in 2013 and about $53 billion over the 9-year period starting in 2013 and ending in 2021.

“When you have a number like that, it is not chump change,” Senkewicz said in an interview.

Seniors know what is going on, and read, and make phone calls, and any changes affecting Medicare beneficiaries become very serious, Senkewicz said.

During the NAIC call, representatives from insurers, managed care companies and organizations such as AARP, Washington, took no issue with the state regulators’ position.

The plans that belong to the Blue Cross and Blue Shield Association, Chicago, also are expressing strong opposition to Medigap program changes.

“Currently, the vast majority of Medigap consumers purchase first-dollar coverage, and studies show they value the financial security first dollar coverage affords,” the Blues say in a position paper defending first-dollar coverage. “These policies enable Medicare beneficiaries to budget without unexpected medical expenses. While substantial changes were made to Medicare in the Affordable Care Act, beneficiaries were assured that their benefits would not be cut.”

Other Medigap coverage from National Underwriter Life & Health: