State Regulators Object to Medicare Hard Sell

November 8, 2004
State insurance commissioners are accusing Medicare of requiring Medigap insurers to use misleading language in promoting the new coverage options that become available under Medicare in 2006.

The National Association of Insurance Commissioners (NAIC) wrote that the federal government was using "precisely the type of 'push' advertising technique that the NAIC and its members consistently oppose and prohibit at the state regulatory level," the New York Times reported.

Under the new Medicare law, Medigap insurers are required to send a notice to policyholders to explain coverage options that will be available in 2006, when the new prescription drug benefit will take effect. The federal Centers for Medicare and Medicaid Services (CMS) has instructed insurers to tell beneficiaries in the first paragraph of the notice that the new drug benefit "will provide greater value than your current coverage."

NAIC said that while an explanation of drug coverage options would be helpful for beneficiaries, CMS has "gone beyond the scope and purpose of the law" by requiring such language.

The letter said that the value of the drug benefit programs is contingent on many factors, such as medical condition, drug costs and financial situation. The commissioners indicated that they were "speaking not as Republicans or Democrats but as professional insurance regulators responsible for protecting consumers."

"As regulators, we should focus on getting facts and information to people, not on cheerleading for a particular plan or a particular type of coverage," Kansas Insurance Commissioner Sandy Praeger (R) said, according to the Times.

Bush administration officials denied that the statements about the value of the new drug benefit are misleading, saying that the program would save beneficiaries an average of $1,000 annually.

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