Senior prescription drug coverage: the state of the medigap markets in Massachusetts and New Hampshire.

Blue Cross Blue Shield of Massachusetts provided additional funding support for the preparation of this Issue Brief, and had no control over its content. Executive Summary While the federal Medicare program has been under intense scrutiny in the past few years, a growing crisis in the medigap insurance market has gone largely ignored by federal and state policy makers. Medigap insurance 1 —health insurance offered by various private carriers to supplement the Medicare program—is an important source of financial protection for the elderly. It both protects Medicare beneficiaries against some or most of the cost-sharing features of the Medicare program (e.g., deductibles, coinsurance), and often provides coverage for certain services, such as prescription drugs, that Medicare does not cover. In the past decade, the federal government has taken an extremely active role in regulating medigap insurance, a significant departure from the past in which regulation was left largely to individual states. Despite the attempt to standardize regulation of medigap insurance , the medigap market in every state is somewhat different, in terms of the number of commercial insurers and managed care companies offering coverage, the rules that govern access to policies, the premium rates that may be charged, and the protections for consumers who want to change plans. This report examines recent trends in the medigap markets in Massachusetts and New Hampshire. Although neighbors geographically, these two states have very different medigap markets and have pursued different regulatory and public policy approaches. New Hampshire's approach mirrors the predominant approach nationally, with the state's implementation of the federal regulatory scheme and protections enacted by Congress in 1990. In contrast, Massachusetts obtained an exemption from the federal requirements, and has adopted a regulatory scheme that is significantly different in terms of the requirements imposed on Medicare supplement insurers and, in some cases, managed care plans. Yet despite these different approaches, a comparison of the situations in Massachusetts and New Hampshire reveals many common problems, and a growing crisis in the medigap markets in both states. Among the most serious problems are: • Most people with individual medigap coverage lack comprehensive drug benefits. In New Hampshire, as in most of the rest of the country, there are no individual medigap products available that provide comprehensive drug coverage. In Massachusetts, where there are several medi-gap plans that provide comprehensive drug coverage, only 20% of elders with individual medigap policies now have comprehensive drug coverage, …