SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1066 words

COMMITTEE: HOUSE WAYS AND MEANS

HEADLINE: MEDICARE SUPPLEMENTAL INSURANCE

TESTIMONY-BY: JENIFER WEISS,, DIRECTOR OF POLICY,

AFFILIATION: MEDICAL RIGHTS CENTER

BODY:
Statement of

Jenifer Weiss, Director of Policy, Medical Rights Center

Testimony Before the Subcommittee on Health of the House Committee on Ways and Means

Hearing on Medicare Supplemental Insurance

March 14, 2002

Introduction

My name is Jennifer Weiss and I am the director of policy at the Medicare Rights Center. The Medicare Rights Center is a national consumer service organization, based in New York, working to ensure that older and disabled Americans get good, affordable health care. Under a contract with the New York State Office for the Aging, with funding from the Centers for Medicare and Medicaid Services, we operate New York State's Health Insurance Assistance Program hotline. Every year we hear from more than 60,000 people with Medicare, who have questions about their Medicare benefits, rights and options. We also operate a National Medicare HMO Hotline that assists elderly and disabled Americans who are struggling to get needed care and coverage from their HMOs. I thank the Ways and Means Subcommittee on Health for this opportunity to testify on Medicare Supplemental Insurance policies. For the older and disabled men and women we serve, there are three critical Medigap issues: they want meaningful and understandable Medigap choices, a good Medigap benefit package, and affordable Medigap coverage. To the extent Medigap reform proposals affect these key issues, on behalf of our clients, we ask that you tread carefully. As you well know, changes often have unintended consequences. Adding new Medigap plans that are not affordable, or that lead to increases in the premiums charged for other Medigap plans, or that discourage access to needed care, will jeopardize the health of older and disabled Americans. At the same time, changes designed to save money by discouraging access to needed care may end up costing Medicare more in future hospitalizations and other complex health services.

Any new Medigap option must be designed so that people can easily understand its risks and benefits. For example, there is incontrovertible evidence that Medigap standardization has been successful in allowing consumers a meaningful basis to comparison shop - a good thing for consumers and for the market.

Medigap first dollar coverage

In an ideal world there would be a simple answer to the question of how to design cost-sharing in Medigap that strikes the right balance between ensuring that people who need care get care and discouraging people from seeking unnecessary care. Finding that delicate balance requires a fair and objective review of our learning on health care usage. Based on our experience, we have two serious concerns that we raise here: One, plans that do not provide first dollar coverage might deter people who elect these plans from getting needed care. Two, plans that do not provide first dollar coverage might draw a healthier pool of policyholders, which could lead Medigap insurers to raise rates on the less healthy pool of policyholders who elected first dollar coverage plans. Moreover, plans that do not provide first dollar coverage are not likely to attract subscribers. As you know, the two high deductible plans currently available have few subscribers. Today, many more people sign up for plans that cover their high deductibles and high cost sharing than for less expensive plans that do not.

Regardless of ideology, none of us wants a health care system that deters people from getting needed care. At the same time, limited public resources should not be diverted to pay for unnecessary care. We need to understand clearly where the dividing line is. The tragedy we hear at the Medicare Rights Center, day after day, is from our elderly clients who report that they go without needed care because they cannot afford it. As you well know, prescription drugs are the prime example of what we consider to be an inhumane and uncivilized deprivation in modern day America. Remember, the Medicare population is a group of Americans who have a median income below $24,000 a year. Indeed, members of the Committee, our neighbors are going without needed health care as we meet today.

Our client experiences also tell us that Medigap policies are the mechanism through which our clients budget for their health care each month, enabling them to predict many of the costs they will face. Human beings, of course, are not clairvoyant and are hard- pressed to self-insure for unexpected high cost health care needs. While a high-deductible Medigap plan may mean a beneficial lower monthly Medigap premium, it may also mean a gamble about future health care needs and out-of-pocket costs that keep people from getting necessary care.

Reducing first dollar costs

As this Committee considers ways to offer people with Medicare meaningful health care choices, encourage access to needed care and discourage unnecessary care, we would urge you to look at offering supplemental coverage options directly through Medicare with a co-pay and a premium. Adding supplemental coverage options to Medicare would allow the millions of people with disabilities under 65 the right to purchase coverage, promoting their access to needed care. It could also spread risk more broadly and help stabilize supplemental insurance premiums. We wonder whether the Congressional Budget Office has ever scored this proposal to expand Medicare and strongly recommend that you request further study of this option.

Access to Medigap and Prescription Drug Coverage

To conclude, we strongly urge that before pushing forward with changes to Medigap that you ask the GAO and the CBO to study these proposed changes and their potential consequences. Add to the current Administration proposals serious review of other options, such as a supplemental policy directly through Medicare. No one expected that the Balanced Budget Act of 1997 would lead to 2.2 million Americans losing their HMO coverage and thousands struggling to secure a Medigap policy. No one would want to offer a change to Medigap that impeded access to needed care. That said, the greatest barrier to needed care right now is the lack of a Medicare prescription drug benefit. Prescription drug coverage through Medigap has proven to be unworkable. Now is the time for Congress to expand Medicare to include prescription drug coverage for everyone.

Thank you.



LOAD-DATE: March 19, 2002