Medigap Insurance: Effects of the Catastrophic Coverage Act of 1988 on Benefits and Premiums

GAO discussed the potential impact of the Medicare Catastrophic Coverage Act of 1988, on Medigap insurance policies. GAO found that the act: (1) provided new benefits to Medicare beneficiaries by limiting beneficiary out-of-pocket costs for covered services; (2) eliminated restrictions on hospital stays and in-patient co-insurance requirements; (3) increased the limit on skilled home nursing care to 150 days, and changed the computation method for co-insurance payments; (4) extended hospice care benefits indefinitely and clarified intermittent home health service benefits; and (5) limited beneficiary supplementary medical insurance liability to $1,295. GAO also found that the 1987 weighted average loss ratio for six commercial insurers was 104 percent, on total premiums of about $475 million.