The Medigap Consumer Protection Act of 2016

Floor Speech

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Mr. McDERMOTT. Mr. Speaker, Medigap plans currently provide supplemental coverage to approximately 11 million Medicare beneficiaries. However, many of the laws governing the Medigap market have remained largely unchanged since 1990. In particular, consumer protections are inadequate, leaving many beneficiaries subject to discriminatory practices by issuers, lacking sufficient information about their plan options, and often enrolled in lower quality coverage.

That is why, today, I am introducing the Medigap Consumer Protection Act. This important legislation will make a number of reforms to the Medigap market that will strengthen the health security of millions of Americans and significantly improve the beneficiary experience.

Most importantly, this bill ends discriminatory treatment of Medicare beneficiaries by extending guaranteed issue rights to the entire Medigap-eligible population.

Currently, federal law provides limited guaranteed issue rights to Medicare beneficiaries. As a result, issuers in many states are permitted to deny consumers access to Medigap policies based on preexisting conditions. This creates substantial barriers to coverage, particularly for individuals who qualify for Medicare due to disability or End-Stage Renal Disease. According to the Kaiser Family Foundation, only 2 percent of beneficiaries who are under 65 and living with a disability are enrolled in a Medigap policy, and 21 percent have no supplemental coverage at all.

The Medigap Consumer Protection Act closes the holes in federal law that permit discriminatory treatment of consumers by extending guaranteed issue rights to the entire Medicare population, including beneficiaries who qualify for Medicare due to disability or End-Stage Renal Disease.

It also will protect a number of other populations, including beneficiaries who have enrolled in Medicare Advantage for more than one year and wish to switch back to traditional Medicare; dual eligibles who either lose their Medicaid coverage or who are only Medicaid- eligible with a Share of Cost; and individuals enrolled in COBRA coverage who wish to switch into Medicare.

The bill also makes a number of reforms that will strengthen access to quality plans and improve the beneficiary experience.

It calls on the National Association of Insurance Commissioners to review loss ratio standards for Medigap plans and submit recommendations to the Secretary to update federal standards.

It reforms how issuers price their products by calling on the NAIC to update its Model Regulations to prohibit pricing discrimination based on age, and by requiring Medigap issuers to set premiums by county.
It requires the Secretary of Health and Human Services to improve the Medicare Plan Finder website to increase consumer access to information regarding their coverage options through Medicare, Medigap, Medicare Advantage, and Part D. The public will be afforded opportunities to comment on and improve the presentation of this information.

It restores access to the most popular Medigap plan options, which under current law are scheduled to be eliminated for beneficiaries who become eligible for Medicare beginning in 2020 or later.

Finally, it provides consumers with additional information about potential conflicts of interest by requiring issuers to disclose payments made to brokers, agents, and other third parties selling Medigap policies. These disclosures will be available to consumers through the Open Payments Database maintained by the Centers for Medicare and Medicaid Services.

Mr. Speaker, Medicare beneficiaries deserve access to high-quality Medigap coverage. The reforms made by the Medigap Consumer Protection Act will correct many of the problems that continue to exist in the market, including discrimination by issuers and a lack of information available to consumers. These reforms are long overdue, and I urge my colleagues to move to enact this bill without delay.

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