In June of 1980, the Baucus Amendment was passed to regulate the sale of Medicare Supplement Insurance (Medigap) policies to seniors. The law was enacted in response to reports of abuses in the marketing of Medigap insurance. Prior to 1980, it was up to states to regulate Medigap. The law established minimum requirements for state regulation of insurance policies marketed to the elderly as Medicare supplemental policies. Those requirements included standards of benefits and loss ratios. A voluntary certification program for Medigap policies was also created.
In 1990, The Omnibus Budget Reconciliation Act established new federal standards for Medigap policies, including standardized benefit packages and minimum loss ratios, replacing the voluntary certification program. A particular version of the policy had to have the same benefits, no matter which company sold it or where it was sold. It also required federal and state action to curb abuses in the marketing of Medigap and to educate consumers.
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