ADVISORY
FROM THE COMMITTEE ON WAYS AND MEANS

SUBCOMMITTEE ON HEALTH

Johnson Announces Hearing on
Medicare Supplemental Insurance

Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on Health of the Committee on Ways and Means, today announced that the Subcommittee will hold a hearing on rationalizing Medicare supplemental insurance policies. The hearing will take place on Thursday, March 14, 2002, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only.  Witnesses will include representatives from the Administration.  However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.

BACKGROUND:

Because Medicare’s fee-for-service program has an antiquated and irrational cost-sharing structure, and fails to cover many essential items like prescription drugs, Medicare beneficiaries buy supplemental coverage to help pay for health care costs not covered by Medicare.  Almost one-quarter (24 percent) of Medicare beneficiaries purchase this coverage as individuals through the private insurance “Medigap” market.  In 1990, Congress created 10 standardized Medigap policies.  All 10 plans are required to cover beneficiaries’ coinsurance - some of the costs of Medicare services for which beneficiaries are responsible, such as 20 percent of the costs of a physician visit.  Nine out of 10 of those policies, which comprise more than 90 percent of the Medigap market, are required to cover the Part A inpatient hospital deductible (currently $812), and the most popular Medigap policy covers both the Part A hospital deductible and the $100 Part B deductible for physician services.

Numerous studies have demonstrated that covering deductibles and coinsurance has led to markedly higher Medicare spending because beneficiaries become insensitive to costs.  In addition, only the three most expensive Medigap plans cover prescription drugs, and that coverage is limited.  Yet, 8 of the 10 plans are required to cover foreign travel insurance, while most beneficiaries never leave their home country.  Because these standard policies are set by statute, however, insurers have not been able to modify their offerings to better serve seniors as the market has evolved. 

In announcing the hearing, Chairman Johnson stated, “Given our desire to make improvements to Medicare this year, we must examine Medigap and how it should fill in the gaps of a revised fee-for-service program that includes a drug benefit.  In addition, it's been 12 years since we looked at how effective the Medigap benefit package is in providing needed coverage to seniors.  I am concerned that the current structure of Medigap, by providing first-dollar coverage, has produced excessive Medicare spending.  I believe we can better design both Medicare and Medigap so that seniors and people with disabilities get the most for the health care dollars they spend.”

FOCUS OF THE HEARING:

Thursday’s hearing will focus on improving Medigap policies in Medicare.  The Administration will present its proposals on Medigap reform.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please note: Due to the change in House mail policy, any person or organization wishing to submit a written statement for the printed record of the hearing should send it electronically to hearingclerks.waysandmeans@mail.house.gov along with a fax copy to (202) 225-2610, by the close of business, Thursday, March 28, 2002.  Those filing written statements who wish to have their statements distributed to the press and interested public at the hearing should deliver their 200 copies to the Subcommittee on Health in room 1136 Longworth House Office Building, in an open and searchable package 48 hours before the hearing.  The U.S. Capitol Police will refuse unopened and unsearchable deliveries to all House Office Buildings.

FORMATTING REQUIREMENTS:

Each statement presented for printing to the Committee by a witness, any written statement or exhibit submitted for the printed record or any written comments in response to a request for written comments must conform to the guidelines listed below. Any statement or exhibit not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. Due to the change in House mail policy, all statements and any accompanying exhibits for printing must be submitted electronically to hearingclerks.waysandmeans@mail.house.gov, along with a fax copy to (202) 225-2610, in Word Perfect or MS Word format and MUST NOT exceed a total of 10 pages including attachments. Witnesses are advised that the Committee will rely on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. A witness appearing at a public hearing, or submitting a statement for the record of a public hearing, or submitting written comments in response to a published request for comments by the Committee, must include on his statement or submission a list of all clients, persons, or organizations on whose behalf the witness appears.

Note: All Committee advisories and news releases are available on the World Wide Web at http://waysandmeans.house.gov.

The Committee seeks to make its facilities accessible to persons with disabilities. If you are in need of special accommodations, please call (202) 225-1721 or (202) 226-3411 TTD/TTY in advance of the event (four business days notice is requested). Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.