Medigap Insurance:

Update on Regulation Under the Baucus Amendment

T-HRD-87-18: Published: Jul 22, 1987. Publicly Released: Jul 22, 1987.

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GAO discussed the federal standards designed to protect the elderly from substandard and overpriced Medigap insurance policies, which are designed to pay expenses which Medicare will not reimburse. GAO found that: (1) the Baucus Amendment, which established minimum requirements for state regulation of insurance policies marketed to the elderly, was meeting its objectives; (2) all but four states have Medigap insurance regulations as stringent as the federal standards; (3) although many states have attempted to prevent abuse through monitoring sales and advertising practices and revoking agents' licenses, abuses still occur in Medigap policy sales; (4) the elderly have better protection against substandard and overpriced policies than they did before the amendment was enacted; (5) although the standards reasonably ensure that Medigap policies will comply with the minimum standards, policyholders may still face significant nonreimbursable expenses; and (6) most of the policies that insurance companies offered in 1985 had loss ratios above target and were the same as for 1984.

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