Medigap Insurance:

Expected 1990 Premiums After Repeal of the Medicare Catastrophic Coverage Act

T-HRD-90-9: Published: Jan 8, 1990. Publicly Released: Jan 8, 1990.

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GAO discussed the effect of repeal of the Medicare Catastrophic Coverage Act (MCCA) on premiums for Medicare supplemental, or Medigap, insurance. GAO found that: (1) private insurance companies have offered Medigap policies to cover some out-of-pocket expenses since Medicare's inception; (2) in 1980, Congress amended the Social Security Act to include certain Medigap insurance requirements; (3) MCCA capped out-of-pocket expenses for covered services and would have covered additional services when fully implemented; (4) Congress repealed MCCA and reversed the reduction in coverage required of Medigap policies; (5) the National Association of Insurance Commissioners changed the minimum insurance standards to require that Medigap insurance cover either all or none of the part A deductible and all policyholders' coinsurance for service under part B after the policyholder paid the $75 deductible; (6) 20 of the 29 commercial Medigap insurers expected their premiums to increase about 19.5 percent higher; (7) about half of the increase was because of general inflation within the medical sector of the economy, increased utilization of medical services, and higher than expected claims experience in prior years, while the other half was due to the repeal of MCCA for additional benefits and administrative costs; and (8) repeal of MCCA placed benefit requirements on Medigap policies that the insurers did not expect to face in 1990.

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