NAIC: Medigap cuts would cause 'massive change' for insurers

The National Association of Insurance Commissioners (NAIC) is staunchly opposed to cutting the Medicare supplement insurance program, making that position clear in a recent letter to Congress.

Many Medigap policies offer so-called "first-dollar" coverage, which don't require co-pays or coinsurance, but this coverage may be dropped to help reduce the deficit, reports The Hill's Healthwatch. The Joint Select Committee on Deficit Reduction, known as the "supercommittee," is charged with cutting $1.2 trillion from the deficit by Thanksgiving, and it has discussed the possibility of eliminating first-dollar coverage from Medigap, according to the National Underwriter.

Such cuts would cause insurers to have "a monumental massive change in payment systems," says Mary Beth Senkewicz, Florida's deputy insurance commissioner, who heads NAIC's senior issues task force. It would require them to recalculate monthly premiums and future costs based on assumptions about how beneficiaries will pay the cost-sharing to reach the thresholds for full coverage or avoid filing claims, Kaiser Health News reports.

NAIC added that cutting first-dollar coverage could shift costs to seniors who are unprepared for the additional expenses, cause "major market disruptions," and raise egal issues like contract impairment and due process problems, notes the National Underwriter.

The Blue Cross and Blue Shield Association (BCBSA) agrees with NAIC. "Currently, the vast majority of  Medigap consumers purchase first-dollar coverage, and studies show they value the financial security first-dollar coverage affords," BCBSA said. "These policies enable Medicare beneficiaries to budget without unexpected medical expenses. While substantial changes were made to Medicare in the Affordable Care Act, beneficiaries were assured that their benefits would not be cut."

To learn more:
- read the NAIC letter to Congress (.pdf)
- check out the Kaiser Health News article
- see the National Underwriter article
- read The Hill's Healthwatch article

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