Kerry introduced a bill to to make Medigap plans comply with new medical loss ratio rules

[karynnj]

under healthcare reform.

Kerry's announcement:

Today, Sen. John Kerry (D-MA) and Rep. Pete Stark (D-CA) introduced 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, not executive compensation or administrative costs. This percentage is called the medical loss ratio (MLR).

“We want premium dollars going towards better care for patients and the system will be stronger when they do,” said Sen. Kerry. “This commonsense bill provides another layer of protection for our seniors.”

“Americans have long paid to line the pockets of insurance executives with their premium dollars,” said Rep. Stark. “Health reform pushes back by ensuring that consumers get improved value for their premium dollars through strong medical loss ratio standards for private health insurers and Medicare Advantage plans. Our legislation builds on those reforms by extending the same standards to Medigap plans."

Under current law, Medigap insurers are required to meet an MLR of only 65 percent in the individual marketplace and 75 percent in the group market. These percentages date back to the original enactment of Medigap insurance standards in 1990. The Medigap Medical Loss Ratio Improvement Act would require Medigap insurance plans to spend at least 85 percent of every premium dollar on medical care in the group market and 80 percent in the individual market. To give insurers time to prepare for this change, it would become effective in 2014.

http://kerry.senate.gov/press/release/?id=00430488-532d-41b6-b80f-0ffd6248db17

AARP, which has its own medigap insurance, has backed this:
http://thehill.com/blogs/healthwatch/health-reform-implementation/173637-overnight-health-

The insurance industry is against it.