Currently, there are multiple proposals in Congress, the Super Committee and the Administration, all of which will limit how much Medigap insurance will be able to pay in benefits as a way to address the current deficit. The thinking is that beneficiaries who don’t have enough “skin in the game,” i.e. beneficiaries who have supplemental coverage and don’t pay deductibles and copayments, end up using too many services, thus costing the Medicare program too much money. While there are no studies to support this thinking, and while the thinking doesn’t make sense, as Medicare will only cover those services it deems as reasonable and “medically necessary” anyway, the proposals are written as if this thinking is the truth.
Some of these proposals would apply retroactively, regardless of the serious legal issues this poses, and would prevent the payment of benefits people already have in Medigap plans (i.e. benefits that cover the Part A and B deductibles, coinsurance and copayments). The National Association of Insurance Commissioners (NAIC) recently released a Discussion Draft reflecting the views of regulators, industry and consumer groups about the dangers of eliminating existing benefits and prohibiting Medigap plans from paying a newly proposed Medicare deductible and half of the copayments.
These proposals are not limited to Medigap. Congress is also trying to apply these prohibitions on benefits to retiree plans and to TriCare for Life. Few Medicare beneficiaries know this is happening. We will be posting an article on these proposals and our views as an organization on them.