Senate Joint Resolution
No. 1
CHAPTER 63
Relative to Medicare.
[
Filed with
Secretary of State
July 16, 1999.
]
LEGISLATIVE COUNSEL'S DIGEST
SJR 1, Speier.
Medicare coverage.
This measure would memorialize the federal government to take steps to ensure that persons abandoned by Medicare HMOs have access to other HMOs or Medigap policies and to rescind the determination that disabled persons under 65 years of age enrolled in HMOs do not have the same rights as other Medicare enrollees, and would memorialize the President to issue an Executive order directing his administration to work closely and coordinate with California and other states to guide and assist Medicare enrollees who are abandoned by their HMOs to obtain new Medicare coverage.
Digest Key
WHEREAS, Many health maintenance organizations (HMOs) have thrown the Medicare system into a state of turmoil by withdrawing coverage of Medicare enrollees at the end of 1998; and
WHEREAS, Thousands of HMO patients in California are now in a state of panic and confusion regarding their future ability to access health care services, including pharmacy benefits, at a reasonable cost; and
WHEREAS, In California, 39 percent of Medicare enrollees, or approximately 1.5 million patients, are served by HMOs, more than double the national average; and
WHEREAS, In recent years, HMOs have aggressively and successfully recruited the elderly into their Medicare health plans with promises to provide more benefits than standard fee-for-service Medicare coverage, including allowances for prescription drugs, hearing aids, and eyeglasses; and
WHEREAS, Each year HMOs participating in the Medicare managed care program are required to notify the federal Health Care Financing Administration (HCFA) whether they will renew their contracts for the following year; and
WHEREAS, This year, numerous HMOs have notified HCFA that they will not renew their contracts for next year, or will reduce the areas that they currently serve, with these withdrawals and service area reductions adversely affecting more than 400,000 beneficiaries across the nation, and over 40,000 Medicare patients in California; and
WHEREAS, The Inspector General of the United States Department of Health and Human Services has discovered that HMOs have been receiving more than $1 billion annually in overpayments from the Medicare Trust Fund, because HMOs are inflating administration costs dedicated to marketing, executive salaries and fringe benefits, legal fees, and other overhead costs; and
WHEREAS, The inspector general has recommended that these funds be recovered from HMOs and dedicated to providing Medicare beneficiaries with added health benefits, including prescription drugs; and
WHEREAS, Many Medicare patients not served by HMOs purchase Medicare supplement insurance, also known as Medigap coverage, which fills in the gaps in Medicare coverage and offers patients the most flexibility in choosing doctors and hospitals, and premiums for Medigap insurance have increased, on average, 35 percent since 1994; and
WHEREAS, Under the federal Balanced Budget Act of 1997, seniors enrolled in a Medicare HMO that terminates its services are eligible to purchase specified Medigap insurance coverage, regardless of their health status, but the last day to take advantage of this guaranteed access is March 4, 1999; and
WHEREAS, Disabled individuals who qualify for Medicare, but are younger than 65 years of age, are not guaranteed access to Medigap coverage under a federal interpretation of federal law, and will need special assistance to secure health care services after they are abandoned by their HMOs; now, therefore, be it
Resolved by the Senate and Assembly of the State of California, jointly, That the Legislature respectfully memorializes the federal government to take immediate and appropriate steps to ensure that persons abandoned by Medicare HMOs have access to other HMO or Medigap policies that cover prescription drugs and to establish stopgap measures to ensure that HMOs do not further restrict coverage areas or benefits until the larger issue of the Medicare HMO payment mechanism is further examined or refined; and be it further
Resolved, That the Legislature respectfully memorializes the federal government to rescind its determination that disabled persons under 65 years of age enrolled in HMOs do not have the same guaranteed rights to Medigap policies as all other Medicare enrollees; and be it further
Resolved, That the Legislature respectfully memorializes the President of the United States to issue an Executive order directing his administration to work closely and coordinate with California and other states to guide and assist Medicare enrollees who are abandoned by their HMOs to find new Medicare coverage, either in the form of another HMO that serves the abandoned region, or through Medigap coverage, until appropriate federal legislation is enacted to address permanently these types of dislocations that adversely affect Medicare patients; and be it further
Resolved, That the Secretary of the Senate transmit copies of this resolution to the President and Vice President of the United States, the Speaker of the House of Representatives, the majority leader of the Senate, each Senator and Representative from California in the Congress of the United States, the Secretary of Health and Human Services, and the Administrator of the Health Care Financing Administration.