FOR IMMEDIATE RELEASE

STATE INSURANCE REGULATOR TESTIFIES
TO NEED FOR GREATER OVERSIGHT
OF MEDICARE MARKETPLACE
Comments Centered on Sales, Marketing by Medicare Private Plans

KANSAS CITY, Mo. (Feb. 7, 2008) — Testifying before the U.S. Senate Finance Committee on the marketing and sales of Medicare private plans, Illinois Insurance Director Michael McRaith outlined several problem areas and urged cooperative federal-state oversight of the marketplace in order to better protect insurance consumers.

“State insurance regulators receive frequent reports of a variety of problems,” said McRaith, who also serves as a member of the NAIC’s Senior Issues Task Force and chair of the NAIC’s Health Innovations Working Group. “Greater state authority is needed to both properly oversee the marketing activities of Medicare private plans and to quickly assist seniors who have been harmed.”

McRaith also urged passage of the Accountability and Transparency in Medicare Marketing Act of 2007 (S. 1883), pending legislation that would supplement federal oversight with a limited grant of authority to states to monitor insurance company marketing activities. This legislation calls for a federal-state partnership approach to oversight of the marketing and sales of Medicare private plans, which is modeled after the process by which Medigap is regulated.

“State insurance regulators have long-standing institutional knowledge, expertise and resources upon which to construct appropriate marketplace safeguards,” McRaith said. “A return of state oversight authority over Medicare Advantage and prescription drug plans would allow us to better protect seniors from companies and agents engaged in unscrupulous or abusive sales practices.”

The most common problems that state insurance regulators have encountered are:

• Marketing and sales practices that pressure beneficiaries to enroll in unsuitable or inappropriate plans;
• Marketing and sales practices leading beneficiaries to enroll in Medicare Advantage plans without fully understanding that enrollment would lead to the loss of traditional Medicare and Medigap plans;
• Beneficiaries being misled about a Medicare Advantage plan’s provider network or provider reimbursement policies;
• Mishandling of enrollment applications;
• Beneficiaries being misled or not informed about a plan’s cost-sharing;
• Tying (i.e., cross-selling) tactics where agents use Medicare Part D as a pretext to develop a relationship with a senior and then sell the senior an unrelated and often unsuitable product (e.g., a Medicare Advantage plan or life insurance policy); and
• Outright common law fraud.

“We work every day to protect consumers, especially those seniors who are among the most vulnerable members of our communities,” McRaith said. “With measured delegation of responsibility, state insurance regulators would not only continue to foster competitive insurance markets — but also ensure that seniors are not sold unsuitable coverage and have prompt resolution of any problems.”

Click HERE to view the full text of McRaith’s testimony.

About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City.

The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.

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