Medigap Insurance:

Premiums and Regulatory Changes After Repeal of the Medicare Catastrophic Coverage Act and 1988 Loss Ratio Data

T-HRD-90-16: Published: Mar 13, 1990. Publicly Released: Mar 13, 1990.

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GAO discussed Medicare supplemental insurance (Medigap), focusing on: (1) 1990 premium increases; (2) Medigap insurers' loss ratios; and (3) changes in federal and state Medigap regulatory requirements. GAO noted that: (1) after Congress passed the Medicare Catastrophic Coverage Act, Medigap insurers estimated that their 1990 premiums would increase an average of 15.4 percent; (2) after Congress repealed the act, 20 of those 29 insurers estimated that their 1990 premiums would increase an average of 19.5 percent, with individual increases ranging from 5 to 51.6 percent; (3) another insurer organization survey found that premiums would increase an average of 29 percent and would have increased an average of 9 percent had the act remained in force; (4) many Medigap insurer loss ratios are not meeting minimum Medicare requirements; (5) under amended Medicare legislation, states are responsible for monitoring Medigap loss ratios; (6) the same amendments adopted the National Association of Insurance Commissioners' (NAIC) standards as criteria for approval of state regulatory programs; (7) the NAIC standards should help to alleviate problems with duplicate coverage and coverage of pre-existing conditions; and (8) Medicare legislation could be further amended to require Medigap insurers to meet loss ratio standards, raise minimum loss ratios, require states to monitor Medigap advertising, encourage states to provide Medigap consumer counseling, or require uniform Medigap benefits.

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