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Life Health > Health Insurance > Health Insurance

Industry defends generous Medigap plans

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A coalition of insurers and producer groups is asking Republican leaders on the House Ways and Means and the House Energy and Commerce committees to protect the Medicare supplement (Medigap) program.

The Coalition to Promote Choice for Seniors — which includes the National Association of Health Underwriters, the National Association of Insurance and Financial Advisors, America’s Health Insurance Plans and the Blue Cross and Blue Shield Association — has written in response to allegations that some Medigap plans drive up Medicare program costs.

The traditional Medicare Part A hospitalization plan and the Medicare Part B outpatient care and physician services plans require enrollees to meet many co-payment, coinsurance and deductible requirements.

Medigap products help traditional Medicare Part A and Part B enrollees pay the out-of-pocket costs.

Federal law requires Medigap issuers to offer standardized packages of benefits. The enrollees who choose the packages that do the most to minimize out-of-pocket costs often have the highest claims. Supporters argue that people with health problems buy the richer products because they know they are likely to need expensive care. Critics say access to the products may encourage users to get care that is either clearly unnecessary or adds little value.

The House is now debating proposals that could restrict access to the richer Medigap products and impose a surtax on some or all Medigap policyholders.

The coalition says in its letter that state regulators at the National Association of Insurance Commissioners found that Medicare program rules determine when the issuers pay claims, and that many peer-reviewed studies have found that increasing “cost sharing” for frail, elderly people could cause them to put off getting care and let what seems like minor problems turn into serious, expensive-to-treat problems.

“Medigap is particularly important to beneficiaries on fixed incomes and those living in rural areas,” the coalition says. “Restricting Medigap options could result in financial hardship for millions of seniors who already spend an average of 15 percent of their income on health care.”

Another problem is that existing contracts are “guaranteed renewable,” and any changes that were retroactive could lead to consumer complaints and litigation, the coalition says.

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