HHS takes NAIC's Medigap advice

The NAIC did its work and "discovered that there is a limited amount of relevant peer-reviewed material on this topic. "

Moreover, none of the studies provided a basis for the design of nominal cost sharing that would encourage the use of appropriate physicians' services. 

Importantly, the NAIC pointed to caution in implementing added cost-sharing because it could result in delayed treatments that could increase Medicare program costs later, for example, increased expenditures for emergency room visits and hospitalizations, and result in adverse health outcomes for vulnerable populations like the elderly, chronically ill and low-income, the NAIC warned.

Significant new changes to Medigap plan offerings were implemented in 2010, which introduced new plans with increased beneficiary cost sharing. "We are still learning the impact of these new offerings on both the Medigap market and to the Medicare program," the NAIC wrote in the letter last year.

Of interest, today Treasury Secretary Jacob Lew stated that "the President also has a specific plan to further strengthen Medicare. He wants to shrink the cost of health care spending, reduce excessive subsidies to prescription drug companies, and ask wealthy seniors to contribute a little more. This plan will not only make Medicare stronger, it will help lower future budget deficits."

Lew made his comments while speaking on the release of the Medicare Trustees report that projected that the trust fund that finances Medicare's hospital insurance coverage will remain solvent until 2026 — two years beyond what was projected in last year's report.

Part B of Supplementary Medical Insurance (SMI), which pays doctors' bills and other outpatient expenses, and Part D, which provides access to prescription drug coverage, are both projected to remain adequately financed into the indefinite future because current law automatically provides financing each year to meet the next year's expected costs.

However, Lew cautioned that the aging population and rising health care costs cause SMI projected costs to grow steadily from 2 percent of GDP in 2012 to approximately 3.3 percent of GDP in 2035.

Roughly three-quarters of these costs will be financed from general revenues and about one-quarter from premiums paid by beneficiaries, Lew stated.