[Congressional Record Volume 157, Number 113 (Tuesday, July 26, 2011)]
[Extensions of Remarks]
[Pages E1411-E1412]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          IMPROVING CONSUMER PROTECTIONS FOR MEDIGAP INSURANCE

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Tuesday, July 26, 2011

  Mr. STARK. Mr. Speaker, I rise to introduce the Medigap Medical Loss 
Ratio Improvement Act. The legislation improves consumer protections in 
the Medigap marketplace by raising the minimum percentage of premium 
dollars that must go toward medical care. I'm joined by my colleagues 
Henry Waxman, Ranking Democrat on the Energy and Commerce Committee, 
and Frank Pallone, Ranking Democrat on the Energy and Commerce Health 
Subcommittee as original cosponsors of the legislation. Senator Kerry 
(D-MA) is introducing the companion bill in the Senate.
  The medical loss ratio, MLR, is the percentage of premium dollars an 
insurance plan spends on the provision of medical care, rather than 
administrative costs, profits, executive compensation, or other 
expenses. It is an important point of information for consumers because 
it is a concrete way for people to measure the value of a health 
insurance product and to compare among other plans in the marketplace.
  As part of the new health reform law, insurers in the private health 
insurance marketplace must now meet a minimum medical loss

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ratio percentage of 80 percent in the individual market and 85 percent 
in the group marketplace. The law also requires all Medicare Advantage 
plans, private plans offered through Medicare, to meet an 85 percent 
MLR standard by 2014.
  In 1990, Congress first passed legislation standardizing Medigap 
policies and instituting minimum MLR standards in reaction to evidence 
of widespread sale of duplicative policies with high overhead. Today, 
more than nine million Medicare beneficiaries purchase private 
supplemental Medigap policies to help cover cost sharing and 
deductibles in traditional Medicare.
  The Medigap Medical Loss Ratio Improvement Act updates the MLR 
standards for Medigap insurers--increasing the percentages to levels 
put forth in health reform for other products. Specifically, it will 
raise the MLR from 65 percent to 80 percent in the individual market 
and from 75 percent to 85 percent in the group marketplace. To give 
insurers time to prepare for this change, it would not become effective 
until 2014.
  It is endorsed by organizations representing millions of senior 
citizens and consumers of all ages, including: AARP, AFSCME, Alliance 
of Retired Americans, Center for Medicare Advocacy, Community Catalyst, 
Families USA, Health Care for America Now, Medicare Rights Center, 
National Council on Aging, and the National Senior Citizens Law Center.
  In endorsing the bill, AARP highlights that, ``AARP supports this 
change because it will provide greater transparency and accountability 
for expenditures made by health insurance issuers, and encourage them 
to become more efficient in their operations to help ensure that 
consumers receive fair value for their premium dollars.''
  This bill should garner bipartisan support. At a February 10, 2011 
hearing in the Ways and Means Committee, a Republican Member questioned 
CMS Actuary Rick Foster about this issue: ``. . . Medigap policies that 
seniors purchase to supplement traditional Medicare are only required 
to meet a medical loss ratio of 65 percent . . . do you think that the 
MLR policy should be applied equitably across the line?'' He answered 
that ``. . . you could probably make a good case that if it makes sense 
in general then it would make sense for the broader spectrum, including 
Medigap policies.'' The Member responded, ``Well, I would think that 
most people would agree that if we are going to do something we should 
do it equally.''
  I agree. That's exactly what we're doing with the Medigap Medical 
Loss Ratio Improvement Act today--we are extending a commonsense 
consumer protection to private Medigap plans. I encourage our 
colleagues on both sides of the aisle to join us to enact this sensible 
improvement to existing law for those who purchase private Medigap 
insurance.

                          ____________________