HEARING - U.S. Senate Special Committee on Aging

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MiCIGAP INSJRANCE: A RPL1C/PRIVATE SECTOR SUCCS STORY
For the nation's elderly, the HKIA believes that Medicare together with
the private health insurance industry ane doing a good job in providing
prvtection against the medical costs of acute catastrophic illnesses. We are
proud of our record in providing supplemental coverage to the Medicare program
so that the Medicare beneficiary can feel confident that his or her acute
health care needs will be met in the future.
There have been sane assumptions in the past that private insurance is
confusing and duplicative. This premise is invalid. A 1983 HCFA study of the
effectiveness of state regulation of Medigap insurance found that duplicative
coverage was rare. Further, the October 1986 GAO study prepared for the House
Ways and Means Health Subcommittee concluded that state regulation of the
Medigap business was working well in controlling sales abuses. Of the
millions of policies presently in force, we are aware of only a handful of
alleged violations brought to the attention of HCFA. Upon investigation, the
majority of these cases were closed because they didn't warrant federal
action. MCFA coordinates review of alleged violations of federal statutes
together with the Federal Trade Camission and the FPstal Service. The HZAA
feels that this process is adequate and that no new federal regulatory
activities are warranted.
H7A's and the GAo's findings reflect the tremendous efforts made by state
insurance regulators and the insurance industry in response to events of the
late 1970s concerning agent sales. In 1577 individual state insurance