HEARING - U.S. Senate Special Committee on Aging

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"Medicare will cover everything' was the second most frequent reason why they do not
buy Medigap. State agencies in Washington, Wisconsin and Idaho already are operating
successful education programs and other states are considering this approach. The
Department of Health and Human Services could provide Information to newly enrolled
Medicare beneficiaries, Including comparisons of coverage, loss ratios, and exclusions of
private plans that meet the applicable state and federal standards. In addition.
beneficiary education could emphasize that neither Medicare nor Medigap are designed
to cover long term care.
Alternately, senior groups or Medicare contractors could provide educational outreach.
These programs could inform beneficiaries about existing options to minimize their
expenses, such as HMOs/CMPs, and could help beneficiaries compare the value of
Medigap policies. Secretary Bowen's report recommends education for long term care,
but that also would be a relatively Inexpensive approach to Inform beneficiaries of the
need for catastrophic coverage of acute-care expenses.
Long Term Care Catastrophic Protection
The lack of long term care protection is the largest catastrophic coverage gap for the
elderly. While Medicare and Medigap provide the elderly with reasonable protection
from catastrophic acute-care expenses, long term care Is the elderly's largest single
out-of-pocket health expense.
The private sector is beginning to respond to this need. The Blue Cross and Blue Shield
organization recently completed a major effort to determine the feasibility of long
term care insurance. Though multiple impediments exist, we believe insurance is
workable. Indeed, one Blue Cross and Blue Shield Plan has begun to offer this coverage,
and several other Plans have pilot programs.
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