[Congressional Record Volume 142, Number 127 (Monday, September 16, 1996)]
[Senate]
[Pages S10600-S10603]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CHAFEE (for himself and Mr. Rockefeller):
  S. 2075. A bill to amend title XVIII of the Social Security Act to 
provide additional consumer protections for medicare supplemental 
insurance; to the Committee on Finance.


                  The Medigap Portability Act of 1996

 Mr. CHAFEE. Mr. President, last month, the President signed 
into law bipartisan legislation that provides greater portability of 
health insurance for working Americans. Today, I join with my 
colleague, Senator Rockefeller, in the introduction of a bipartisan 
bill that will provide some of the same guarantees for seniors who buy 
Medicare supplemental insurance or Medigap policies.
  Of the 37 million Medicare beneficiaries, 80 percent, or nearly 30 
million, have some form of Medicare supplemental insurance, whether 
covered through a retiree health plan or a private Medigap policy. 
Under current law, Medigap insurers must issue these policies without 
pre-existing condition limitations during the 6-month period 
immediately after the beneficiary becomes eligible for Medicare. Our 
bill does three things for seniors who have purchased Medigap 
insurance.
  First, it guarantees that if their plan goes out of business or the 
beneficiary moves out of a plan service area, he or she can buy another 
comparable policy. These rules also would apply to a senior who has had 
coverage under a retiree health plan if their plan goes out of 
business.
  Second, it encourages seniors to enroll in Medicare managed care by 
guaranteeing that they can return to Medicare fee-for-service and, 
during the first year of enrollment, get back their same Medigap policy 
if they decide they do not like managed care. Under current law, if a 
senior wishes to enroll in a Medicare managed care plan, they have two 
options. They may drop their Medigap policy, and hope they can get 
another if they go back to fee-for-service, or they can continue paying 
their Medigap premiums in the event that they may need the policy again 
some day--a very costly option for those on fixed incomes.
  Third, it provides a 6-month open enrollment period for those under 
65 who become Medicare beneficiaries because they are disabled. Under 
current Federal law, Medicare beneficiaries are offered a 6-month open 
enrollment period only if they are 65. There are approximately 4 
million Americans who are under 65 years of age and are enrolled in the 
Medicare Program. Currently, they do not currently have access to 
Medigap policies unless State laws require insurers to offer policies 
to them.
  It is true that this bill does not go as far as some advocacy groups 
would like. Our bill leaves to the States more controversial issues, 
such as continuous open enrollment and community rating of Medigap 
premiums. I believe, however, that this legislation will provide 
seniors the same guarantees that we provided to working Americans under 
the Kassebaum-Kennedy legislation. Thank you, Mr. President.
  I ask unanimous consent that the text of the bill be included in the 
Record immediately following my remarks.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2075

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Medigap Portability Act of 
     1996''.

     SEC. 2. MEDIGAP AMENDMENTS.

       (a) Guaranteeing Issue Without Preexisting Conditions for 
     Continuously Covered Individuals.--Section 1882(s) of the 
     Social Security Act (42 U.S.C. 1395ss(s)) is amended--
       (1) in paragraph (3), by striking ``paragraphs (1) and 
     (2)'' and inserting ``this subsection'',
       (2) by redesignating paragraph (3) as paragraph (4), and
       (3) by inserting after paragraph (2) the following new 
     paragraph:
       ``(3)(A) The issuer of a medicare supplemental policy--
       ``(i) may not deny or condition the issuance or 
     effectiveness of a medicare supplemental policy described in 
     subparagraph (C);
       ``(ii) may not discriminate in the pricing of the policy on 
     the basis of the individual's health status, medical 
     condition (including both physical and mental illnesses), 
     claims experience, receipt of health care, medical history, 
     genetic information, evidence of insurability (including 
     conditions arising out of acts of domestic violence), or 
     disability; and
       ``(iii) may not impose an exclusion of benefits based on a 
     pre-existing condition,

     in the case of an individual described in subparagraph (B) 
     who seeks to enroll under the policy not later than 63 days 
     after the date of the termination of enrollment described in 
     such subparagraph.
       ``(B) An individual described in this subparagraph is an 
     individual described in any of the following clauses:
       ``(i) The individual is enrolled with an eligible 
     organization under a contract under section 1876 or with an 
     organization under an agreement under section 1833(a)(1)(A) 
     and such enrollment ceases either because the individual 
     moves outside the service area of the organization under the 
     contract or agreement or because of the termination or 
     nonrenewal of the contract or agreement.
       ``(ii) The individual is enrolled with an organization 
     under a policy described in subsection (t) and such 
     enrollment ceases either because the individual moves outside 
     the service area of the organization under the policy, 
     because of the bankruptcy or insolvency of the insurer, or 
     because the insurer closes the block of business to new 
     enrollment.

[[Page S10601]]

       ``(iii) The individual is covered under a medicare 
     supplemental policy and such coverage is terminated because 
     of the bankruptcy or insolvency of the insurer issuing the 
     policy, because the insurer closes the block of business to 
     new enrollment, or because the individual changes residence 
     so that the individual no longer resides in a State in which 
     the issuer of the policy is licensed.
       ``(iv) The individual is enrolled under an employee welfare 
     benefit plan that provides health benefits that supplement 
     the benefits under this title and the plan terminates or 
     ceases to provide (or significantly reduces) such 
     supplemental health benefits to the individual.
       ``(v)(I) The individual is enrolled with an eligible 
     organization under a contract under section 1876 or with an 
     organization under an agreement under section 1833(a)(1)(A) 
     and such enrollment is terminated by the enrollee during the 
     first 12 months of such enrollment, but only if the 
     individual never was previously enrolled with an eligible 
     organization under a contract under section 1876 or with an 
     organization under an agreement under section 1833(a)(1)(A).
       ``(II) The individual is enrolled under a policy described 
     in subsection (t) and such enrollment is terminated during 
     the first 12 months of such enrollment, but only if the 
     individual never was previously enrolled under such a policy 
     under such subsection.
       ``(C)(i) Subject to clause (ii), a medicare supplemental 
     policy described in this subparagraph, with respect to an 
     individual described in subparagraph (B), is a policy the 
     benefits under which are comparable or lesser in relation to 
     the benefits under the enrollment described in subparagraph 
     (B) (or, in the case of an individual described in clause 
     (ii), under the most recent medicare supplemental policy 
     described in clause (ii)(II)).
       ``(ii) An individual described in this clause is an 
     individual who--
       ``(I) is described in subparagraph (B)(v), and
       ``(II) was enrolled in a medicare supplemental policy 
     within the 63 day period before the enrollment described in 
     such subparagraph.
       ``(iii) As a condition for approval of a State regulatory 
     program under subsection (b)(1) and for purposes of applying 
     clause (i) to policies to be issued in the State, the 
     regulatory program shall provide for the method of 
     determining whether policy benefits are comparable or lesser 
     in relation to other benefits. With respect to a State 
     without such an approved program, the Secretary shall 
     establish such method.
       ``(D) At the time of an event described in subparagraph (B) 
     because of which an individual ceases enrollment or loses 
     coverage or benefits under a contract or agreement, policy, 
     or plan, the organization that offers the contract or 
     agreement, the insurer offering the policy, or the 
     administrator of the plan, respectively, shall notify the 
     individual of the rights of the individual, and obligations 
     of issuers of medicare supplemental policies, under 
     subparagraph (A).''.
       (b) Limitation on Imposition of Preexisting Condition 
     Exclusion During Initial Open Enrollment Period.--Section 
     1882(s)(2)(B) of such Act (42 U.S.C. 1395ss(s)(2)(B)) is 
     amended to read as follows:
       ``(B) In the case of a policy issued during the 6-month 
     period described in subparagraph (A), the policy may not 
     exclude benefits based on a pre-existing condition.''.
       (c) Clarifying the Nondiscrimination Requirements During 
     the 6-Month Initial Enrollment Period.--Section 1882(s)(2)(A) 
     of such Act (42 U.S.C. 1395ss(s)(2)(A)) is amended to read as 
     follows:
       ``(2)(A)(i) In the case of an individual described in 
     clause (ii), the issuer of a medicare supplemental policy--
       ``(I) may not deny or condition the issuance or 
     effectiveness of a medicare supplemental policy, and
       ``(II) may not discriminate in the pricing of the policy on 
     the basis of the individual's health status, medical 
     condition (including both physical and mental illnesses), 
     claims experience, receipt of health care, medical history, 
     genetic information, evidence of insurability (including 
     conditions arising out of acts of domestic violence), or 
     disability.
       ``(ii) An individual described in this clause is an 
     individual for whom an application is submitted before the 
     end of the 6-month period beginning with the first month as 
     of the first day on which the individual is 65 years of age 
     or older and is enrolled for benefits under part B.''.
       (d) Extending 6-Month Initial Enrollment Period to Non-
     Elderly Medicare Beneficiaries.--Section 1882(s)(2)(A)(ii) of 
     such Act (42 U.S.C. 1395ss(s)(2)(A)), as amended by 
     subsection (c), is amended by striking ``is submitted'' and 
     all that follows and inserting the following: ``is 
     submitted--
       ``(I) before the end of the 6-month period beginning with 
     the first month as of the first day on which the individual 
     is 65 years of age or older and is enrolled for benefits 
     under part B; and
       ``(II) for each time the individual becomes eligible for 
     benefits under part A pursuant to section 226(b) or 226A and 
     is enrolled for benefits under part B, before the end of the 
     6-month period beginning with the first month as of the first 
     day on which the individual is so eligible and so 
     enrolled.''.
       (e) Effective Dates.--
       (1) Guaranteed issue.--The amendment made by subsection (a) 
     shall take effect on July 1, 1997.
       (2) Limit on preexisting condition exclusions.--The 
     amendment made by subsection (b) shall apply to policies 
     issued on or after July 1, 1997.
       (3) Clarification of nondiscrimination requirements.--The 
     amendment made by subsection (c) shall apply to policies 
     issued on or after July 1, 1997.
       (4) Extension of enrollment period to disabled 
     individuals.--
       (A) In general.--The amendment made by subsection (d) shall 
     take effect on July 1, 1997.
       (B) Transition rule.--In the case of an individual who 
     first became eligible for benefits under part A of title 
     XVIII of the Social Security Act pursuant to section 226(b) 
     or 226A of such Act and enrolled for benefits under part B of 
     such title before July 1, 1997, the 6-month period described 
     in section 1882(s)(2)(A) of such Act shall begin on July 1, 
     1997. Before July 1, 1997, the Secretary of Health and Human 
     Services shall notify any individual described in the 
     previous sentence of their rights in connection with medicare 
     supplemental policies under section 1882 of such Act, by 
     reason of the amendment made by subsection (d).
       (f) Transition Provisions.--
       (1) In general.--If the Secretary of Health and Human 
     Services identifies a State as requiring a change to its 
     statutes or regulations to conform its regulatory program to 
     the changes made by this section, the State regulatory 
     program shall not be considered to be out of compliance with 
     the requirements of section 1882 of the Social Security Act 
     due solely to failure to make such change until the date 
     specified in paragraph (4).
       (2) NAIC standards.--If, within 9 months after the date of 
     the enactment of this Act, the National Association of 
     Insurance Commissioners (in this subsection referred to as 
     the ``NAIC'') modifies its NAIC Model Regulation relating to 
     section 1882 of the Social Security Act (referred to in such 
     section as the 1991 NAIC Model Regulation, as modified 
     pursuant to section 171(m)(2) of the Social Security Act 
     Amendments of 1994 (Public Law 103-432) and as modified 
     pursuant to section 1882(d)(3)(A)(vi)(IV) of the Social 
     Security Act, as added by section 271(a) of the Health Care 
     Portability and Accountability Act of 1996 (Public Law 104-
     191) to conform to the amendments made by this section, such 
     revised regulation incorporating the modifications shall be 
     considered to be the applicable NAIC model regulation 
     (including the revised NAIC model regulation and the 1991 
     NAIC Model Regulation) for the purposes of such section.
       (3) Secretary standards.--If the NAIC does not make the 
     modifications described in paragraph (2) within the period 
     specified in such paragraph, the Secretary of Health and 
     Human Services shall make the modifications described in such 
     paragraph and such revised regulation incorporating the 
     modifications shall be considered to be the appropriate 
     Regulation for the purposes of such section.
       (4) Date specified.--
       (A) In general.--Subject to subparagraph (B), the date 
     specified in this paragraph for a State is the earlier of--
       (i) the date the State changes its statutes or regulations 
     to conform its regulatory program to the changes made by this 
     section, or
       (ii) 1 year after the date the NAIC or the Secretary first 
     makes the modifications under paragraph (2) or (3), 
     respectively.
       (B) Additional legislative action required.--In the case of 
     a State which the Secretary identifies as--
       (i) requiring State legislation (other than legislation 
     appropriating funds) to conform its regulatory program to the 
     changes made in this section, but
       (ii) having a legislature which is not scheduled to meet in 
     1998 in a legislative session in which such legislation may 
     be considered,

     the date specified in this paragraph is the first day of the 
     first calendar quarter beginning after the close of the first 
     legislative session of the State legislature that begins on 
     or after July 1, 1998. For purposes of the previous sentence, 
     in the case of a State that has a 2-year legislative session, 
     each year of such session shall be deemed to be a separate 
     regular session of the State legislature.

     SEC. 3. INFORMATION FOR MEDICARE BENEFICIARIES.

       (a) Grant program.--
       (1) In general.--The Secretary of Health and Human Services 
     (in this section referred to as the ``Secretary'') is 
     authorized to provide grants to--
       (A) private, independent, non-profit consumer 
     organizations, and
       (B) State agencies,

     to conduct programs to prepare and make available to medicare 
     beneficiaries comprehensive and understandable information on 
     enrollment in health plans with a medicare managed care 
     contract and in medicare supplemental policies in which they 
     are eligible to enroll. Nothing in this section shall be 
     construed as preventing the Secretary from making a grant to 
     an organization under this section to carry out activities 
     for which a grant may be made under section 4360 of the 
     Omnibus Budget Reconciliation Act of 1990 (Public Law 101-
     508).
       (2) Consumer satisfaction surveys.--Any eligible 
     organization with a medicare managed care contract or any 
     issuer of a medicare supplemental policy shall--
       (A) conduct, in accordance with minimum standards approved 
     by the Secretary, a

[[Page S10602]]

     consumer satisfaction survey of the enrollees under such 
     contract or such policy; and
       (B) make the results of such survey available to the 
     Secretary and the State Insurance Commissioner of the State 
     in which the enrollees are so enrolled.

     The Secretary shall make the results of such surveys 
     available to organizations which receive grants under 
     paragraph (1).
       (3) Information.--
       (A) Contents.--The information described in paragraph (1) 
     shall include at least a comparison of such contracts and 
     policies, including a comparison of the benefits provided, 
     quality and performance, the costs to enrollees, the results 
     of consumer satisfaction surveys on such contracts and 
     policies, as described in subsection (a)(2), and such 
     additional information as the Secretary may prescribe.
       (B) Information standards.--The Secretary shall develop 
     standards and criteria to ensure that the information 
     provided to medicare beneficiaries under a grant under this 
     section is complete, accurate, and uniform.
       (C) Review of information.--The Secretary may prescribe the 
     procedures and conditions under which an organization that 
     has obtained a grant under this section may furnish 
     information obtained under the grant to medicare 
     beneficiaries. Such information shall be submitted to the 
     Secretary at least 45 days before the date the information is 
     first furnished to such beneficiaries.
       (4) Consultation with other organizations and providers.--
     An organization which receives a grant under paragraph (1) 
     shall consult with private insurers, managed care plan 
     providers and other health care providers, and public and 
     private purchasers of health care benefits in order to 
     provide the information described in paragraph (1).
       (5) Terms and conditions.--To be eligible for a grant under 
     this section, an organization shall prepare and submit to the 
     Secretary an application at such time, in such form, and 
     containing such information as the Secretary may require. 
     Grants made under this section shall be in accordance with 
     terms and conditions specified by the Secretary.
       (b) Cost-Sharing.--
       (1) In general.--Each organization which provides a 
     medicare managed care contract or issues a medicare 
     supplemental policy (including a medicare select policy) 
     shall pay to the Secretary its pro rata share (as determined 
     by the Secretary) of the estimated costs to be incurred by 
     the Secretary in providing the grants described in subsection 
     (a).
       (2) Limitation.--The total amount required to be paid under 
     paragraph (1) shall not exceed $35,000,000 in any fiscal 
     year.
       (3) Application of proceeds.--Amounts received under 
     paragraph (1) are hereby appropriated to the Secretary to 
     defray the costs described in such paragraph and shall remain 
     available until expended.
       (c) Definitions.--In this section:
       (1) Medicare managed care contract.--The term ``medicare 
     managed care contract'' means a contract under section 1876 
     or section 1833(a)(1)(A) of the Social Security Act.
       (2) Medicare supplemental policy.--The term ``medicare 
     supplemental policy'' has the meaning given such term in 
     section 1882(g) of the Social Security Act.

  Mr. ROCKEFELLER. Mr. President, I join my colleague from Rhode 
Island, Senator Chafee, in introducing a bill that aims at taking 
another significant step in extending the kind of health care security 
we want for all Americans. I believe the recent enactment of the 
Kassebaum-Kennedy health reform bill confirms that those of us who want 
to expand health care access, coverage, and quality for Americans have 
every reason to press on. And the Senator from Rhode Island and I have 
very deliberately adopted the same principles of bipartisanship and 
pragmatism in crafting this new bill to take the next steps forward in 
health reform.
  Our bill responds to a clear need among Medicare's beneficiaries, 
especially the 4 million disabled Americans who rely on Medicare, to be 
able to count on supplemental insurance when they seek it. As important 
as Medicare is, it covers less than one-half of beneficiaries' total 
health care costs. As a result, almost 80 percent of all Medicare 
beneficiaries buy private, supplemental insurance that gives them extra 
coverage and financial relief. But it turns out that seniors and the 
disabled are having all kinds of difficulties in obtaining or holding 
onto this supplemental insurance. Our bill solves some of these 
problems, by making Medigap policies portable, more reliable, and more 
accessible in different situations.
  Specifically, our bill requires insurers to issue a Medigap policy to 
a Medicare beneficiary who loses his or her Medigap coverage because he 
or she moves out of a plan's service area; because an HMO or managed 
care plan goes out of business or withdraws from the market; or because 
an employer drops, or substantially cuts back, retiree health benefits.
  This legislation responds to changes we are seeing that are hurting 
older and disabled Americans, which includes 50,000 disabled West 
Virginians. For example, more and more employers are cutting costs by 
cutting back on their retirees' health benefits. Between 1993 and 1995, 
the number of large employers who provided retiree health benefits 
dropped by 5 percent. When retirees lose employer-sponsored health 
benefits, they are forced to go to the private market and purchase 
individual coverage.
  If they have any type of preexisting medical condition, they will be 
lucky to find an insurance company who will sell them a Medigap policy 
without a lengthy pre-existing condition limitation. Others will not be 
so lucky. They won't find an insurer willing to sell them a policy at 
any price.
  Mr. President, our bill gives Medicare beneficiaries an opportunity 
to try a managed care plan without worrying about losing their ability 
to return to fee-for-service medicine. Our legislation would give 
Medicare beneficiaries a 12-month trial period to try a Medicare 
managed care option. Understandably, many seniors are very nervous 
about enrolling in a managed care organization if it means losing 
access to their lifelong doctor.
  Our bill lets Medicare beneficiaries see if a managed health care 
plan suits them and gives them a way back to fee-for-service medicine, 
if that is their personal preference.

  Mr. President, my preference would be to allow continuously insured 
Medicare beneficiaries to freely switch types of policies--fee-for-
service versus managed care--and insurers, on an annual basis. This 
would allow seniors the ability to switch insurers for customer service 
reasons or any other personal preference. But because the insurance 
companies are especially opposed to any type of continuous or annual 
open enrollment policy for Medigap insurance--even for individuals who 
are continuously insured--we have to have our bill aim for the more 
modest improvements in portability that we think we have a better 
chance of enacting.
  Our legislation bans insurance companies from imposing any 
preexisting condition limitation during the 6-month open enrollment 
period for Medigap insurance when a person first qualifies for 
Medicare. This makes the rules for Medigap policies consistent with the 
recently enacted Kassebaum-Kennedy bill, and with Medicare coverage 
which begins immediately, regardless of preexisting conditions.
  For the disabled, this bill is a big improvement over current law. In 
1990, Congress mandated that insurers must sell a Medigap policy to any 
senior wishing to buy coverage when that individual first becomes 
eligible for Medicare. The disabled were left out at that time because 
of insurance company-generated concerns about potentially huge premium 
hikes for current Medigap policyholders.
  Since then, at least 10 States went ahead and required insurers to 
issue policies to all Medicare beneficiaries in their States, including 
the disabled. My staff called those States, and not one State reported 
large hikes in premiums as a result of their new laws requiring access 
to Medigap for the disabled.
  The Health Care Financing Administration [HCFA] has also estimated 
that Medicare's average per-person cost for the disabled is actually 
less than Medicare's average per-person cost for the aged. So, Mr. 
President, I believe we can put concerns about large premium hikes to 
rest, and move to guarantee the disabled access to private Medigap 
policies.
  This bill will help people like a 44-year-old man from Capon Bridge, 
WV, who qualifies for Medicare because of a disability. He earns too 
much money to qualify for Medicaid and is unable to buy a private 
Medigap policy because of a chronic medical condition.
  Medigap insurers in West Virginia refuse to sell him a policy because 
of his medical condition. A 47-year-old woman from Slanesville, WV, is 
in a similar situation. She was uninsured before qualifying for 
Medicare because of a chronic kidney disease that requires dialysis. 
Her husband and she have too many assets to qualify for Medicaid and 
they cannot afford the $300 a month, or $3,600 a year premium for 
health insurance provided through

[[Page S10603]]

her husband's job. The average cost of a Medigap policy ranges from 
$700 to $1,000 a year. Access to a Medigap policy would be a more 
affordable option for this family.
  Mr. President, our bill also includes a section to help seniors 
choose the right health plan for them by ensuring that they get good 
information on what plans are available in their area.
  It allows them to compare different health plans based on results of 
consumer satisfaction surveys, and will include information on benefits 
and costs.
  Our bill does not directly address affordability. Just as the 
Kassebaum-Kennedy bill was not able to take that step, we leave it to 
the States to consider ways to promote affordable Medigap premiums. But 
Congress has some history in the Medigap market, with legislation 
passed in 1980, and again in 1990, to guarantee at least a minimal 
level of value across all Medigap policies. Under the current law that 
I helped enact back in 1990, individual and group Medigap policies must 
spend at least 65 percent and 75 percent, respectively, of all premium 
dollars collected, on benefits. If a Medigap plan fails to meet these 
minimum loss ratios, they must issue refunds or credits to their 
customers.
  Mr. President, while Federal loss ratio standards help assure a 
minimum level of value, they do not prevent insurance companies from 
annually upping premiums as a senior ages. This practice--known as 
attained age-rating--results in the frailest and the lowest income 
seniors facing large, annual premium hikes as they age. I would hope 
that more States would follow the lead of at least five other States 
who have banned attained age-rating. This would vastly improve the 
affordability of Medigap for the oldest and frailest of our seniors.
  Mr. President, our bill is a targeted, modest bill. But if and when 
we enact it, it will provide very real, very significant help to the 
seniors who, year in and year out, pay out billions of dollars in 
premiums in order to have the extra protection of Medigap protection.
  It is wrong and unfair when senior and disabled citizens in West 
Virginia and across the country are suddenly dropped by insurers or 
denied a Medigap policy just because they move to another State, or 
their employer cuts back on promised retiree health benefits, or 
because they're disabled.
  In the bipartisan and practical spirit of the Kassebaum-Kennedy bill, 
we now propose the same kind of commonsense, consumer protections and 
reforms, to help over 33 million senior citizens and almost 5 million 
disabled Americans. It is a great honor to be presenting this bill with 
the Senator from Rhode Island, someone who is responsible for many of 
the country's most important achievements in health care. I urge my 
colleagues to cosponsor this bill, and to help us extend the health 
care peace of mind that older and disabled Americans ask for and 
deserve.
                                 ______