April 2, 2018
Senator Ed Hernandez, Chair
Senate Committee on Health
State Capitol, Room 2080
Sacramento, CA 95814
RE: Support SB 1457
Dear Senator Hernandez:
California Health Advocates (CHA) supports your bill SB 1457 that, among other requirements, will ensure that Medicare Supplement products (Medigaps) sold by licensees of the Department of Managed Health Care (DMHC) will be included in national data collected by the National Association of Insurance Commissioners (NAIC) and accurately reflect federal law.
CHA is a not-for- profit organization dedicated to providing quality Medicare and related insurance coverage, information, education and policy advocacy. CHA provides technical assistance and training to local Health Insurance Counseling & Advocacy Programs (HICAP) that provide benefits counseling and community education on Medicare, and Medigap and long-term care insurance. CHA has been engaged for several decades in promoting high regulatory standards for Medigap policies, both in the state legislature and at the National Association of Insurance Commissioners (NAIC).
The NAIC is charged under federal law with drawing up national rules under which Medigap policies are designed, marketed and sold. The NAIC is responsible for amending the NAIC Model Law and Regulation whenever Medigap policies are changed under federal law. States are required to adopt these Model changes to retain their regulatory authority over Medigap products.
The DMHC is not a member of the NAIC since it is a different type of regulatory body than a state insurance department. Therefor the DMHC does not participate in the NAIC process for revising the Models that reflect changes in federal law, nor does it receive the most current regulatory experience and information about Medigap policies.
Insurance companies licensed by the Department of Insurance are required to report their Medigap data annually as part of the NAIC’s accreditation of the state insurance department. National Medigap data is relied upon by MedPAC, researchers, and other federal policymakers who are studying and making recommendations about health care costs and payers of those costs.
Licensees of DMHC are not required under the Knox-Keene regulatory process to submit their annual Medigap data to the NAIC, thus creating a significant gap in the national record of health care costs and payments.
SB 1457 will eliminate that gap in the national data record, and ensure that DMHC has the latest and most accurate information about any state regulatory issues that arise, and accurately respond to any changes that are made to Medigap products by federal law. DMHC’s regulatory process, and consumers, will benefit from voluntary NAIC participation for this one state and federally regulated product. DMHC licensees issuing Medigap coverage are well acquainted with the NAIC process for reporting Medigap data, and already have an NAIC number for their insurance activities. It should be a fairly simple process for DMHC licensees to report their Medigap data issued under Knox-Keene licensure, as they already do this in every state as a licensee of state insurance departments.