This report reviews certain aspects of the effectiveness of the Public Law 96-265 provisions (Section 1882 of the Social Security Act) designed to protect the elderly against substandard and overpriced health insurance policies supplementing Medicare. This document on Medigap policies includes an executive summary and five chapters. Chapter 1 looks at the Medicare program; the Baucus Amendment; state regulation of insurance industry; the Medigap market; and the objectives, scope, and methodology of the report. Chapter 2 examines state regulatory programs, almost all of which met minimum federal standards. Chapter 3 discusses the policies reviewed by the General Accounting Office, which generally met standards. Chapter 4 explains loss ratio and presents findings that loss ratio experience of Medigap policies is mixed and generally not used by states to evaluate premiums. Chapter 5 examines federal and state efforts to curb sales abuse through education and penalties. Because the report found that Section 1882, when combined with state efforts, appeared to be meeting its objectives of protecting the elderly against substandard Medigap policies and providing them with information on how to select Medigap policies, no recommendations for change are included. Four tables and one figure are included; Company-Wide Loss Ratio Experience for Medicare Supplemental Insurance is appended. (NB)