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PubMedDate not supplied

Asymmetric information and the demand for Medigap insurance.

The Medigap insurance market has been characterized as having considerable cross-policy variation in contract design and relatively high premiums vis-a-vis average risk exposure. One explanation for these characteristics is that adverse selection exists in the Medigap market. The purpose of this study is to investigate adverse selection effects among those purchasing Medigap insurance. Findings are consistent with the presence of adverse selection in the Medigap market and premium cross-subsidization from low- to high-risk insured individuals.

Health Expenditures↗
PubMed1997

Adverse selection and the purchase of Medigap insurance by the elderly.

This study uses data on 8561 elderly respondents from the 1991 Medicare Current Beneficiary Survey to examine adverse selection in the supplemental private insurance market. Logit models of supplemental insurance choices provided modest but mixed evidence of self-selection on the basis of observable health status. Wealth had a strong influence on coverage. Two part models of Medicare utilization and expenditures showed that beneficiaries with individually purchased policies had higher total, part B and physician expenditures than those with employer-provided policies, even after controlling for observable differences, suggesting adverse selection. Results were similar for basic and more comprehensive policies.

Aged↗
PubMed1991

Adverse selection, moral hazard, and wealth effects in the Medigap insurance market.

Using data from a longitudinal study of the recently retired we attempt to separate the moral hazard effect of Medicare supplementary (Medigap) insurance on health care expenditures from the adverse selection effect of poor health on Medigap coverage. We find evidence of adverse selection, but its magnitude is unlikely to create serious efficiency problems. Taking adverse selection into account reduces the estimate of the moral hazard effect. In addition, we find a strong positive wealth effect on the demand for supplementary insurance.

Aged↗
PubMed2003

Medicare supplemental insurance (Medigap).

Original Medicare does not provide complete coverage for its beneficiaries. Many people with Medicare need additional coverage to fill in those gaps. A Medicare supplemental insurance policy (Medigap) can provide your clients with extra benefits not covered by Medicare. In this brief we offer an overview of Medigap policies and advice on what your clients should consider when purchasing a plan.

Aged↗
PubMed2006

Estimation of a hedonic pricing model for Medigap insurance.

OBJECTIVE: This paper uses a unique database to examine premiums paid by beneficiaries for Medigap supplemental coverage. Average premiums charged by insurers are reported, as well as premiums by enrollee age and gender, and additional policy characteristics. Marginal prices for Medigap benefits are estimated using hedonic price regressions. In addition, the paper considers how additional policy characteristics and geographic differences in the use and cost of medical care affect premiums. DATA SOURCES/STUDY SETTING: A comprehensive database on premiums paid by beneficiaries for newly issued Medigap policies in the year 2000 along with state-level characteristics. STUDY DESIGN: Hedonic pricing equations are used to estimate implicit prices for Medigap benefits. DATA COLLECTION/EXTRACTION METHODS: The Centers for Medicare & Medicaid Services contracted for the creation of a detailed database on Medigap premiums. Data were collected in three stages. First, letters were sent directly to insurers requesting premium data. Second, letters were directly to state insurance commissioner's offices requesting premium data. Last, each state insurance commissioner's office was visited to collect missing data. PRINCIPAL FINDINGS: With the exceptions of the part B deductible and drug benefit, Medigap supplemental insurance is priced consistent with the actuarial value of benefits offered under the standardized plans. Premiums vary substantially based on rating method, whether the policy is guaranteed issue, Medigap Select, or explicitly for smokers. Premiums increase with enrollee age, but do not vary between men and women. The relationship between premiums and enrollee age varies across rating methods. Attained-age policies show the strongest relationship between age and premiums, while community-rated premiums, by definition, do not vary with age. Medigap supplemental insurance premiums are higher in states with poorer health, greater utilization, and greater managed care penetration. CONCLUSIONS: Despite the high cost, Medigap plans are generally priced in accordance with the actuarial value of benefits. The primary exception is the drug benefit, which appears to be subject to substantial adverse selection. Benefits such as the part B deductible and at-home recovery benefit offer little value to consumers. Several states require insurers to community rate premiums. Such regulation has important implications for premiums, and research needs to consider the impact of such regulation on the Medigap market.

Aged↗
PubMed1990

Illness-episode approach: costs and benefits of medigap insurance.

Over two-thirds of Medicare beneficiaries have private supplementary coverage, but few know enough about Medicare, their own supplements, or available alternatives to make intelligent comparisons and informed purchasing decisions. The illness-episode approach, a new way to provide insurance information to Medicare beneficiaries, calculates out-of-pocket costs likely to be faced by beneficiaries experiencing 13 illnesses, under Medicare alone and under different medigap policies. Applying the approach to six policies marketed in Los Angeles in 1986 revealed that plans varied widely in their ability to reduce financial vulnerability; many still leave the elderly with substantial out-of-pocket costs.

Community Participation↗
PubMed2001

Medicare in the 21st century.

The authors provide an overview of the Medicare program in terms of how the current program operates, the current issues it faces that may shape possible options for reform, and the implications of these features and issues for employment-based health plans. Current issues include adoption of a premium support model, changes in the eligibility age for Medicare benefits, Medigap insurance, benefits covered and customer service.

Age Factors↗
PubMed1998

A comparison of patterns of care of nonsmall cell lung carcinoma patients in a younger and Medigap commercially insured cohort.

BACKGROUND: The objective of this study was to examine and compare lifetime treatment patterns and hospitalization of incident nonsmall cell lung carcinoma (NSCLC) between pre-Medicare eligible (age < 65 years) and supplemental Medigap (age > or = 65 years) enrollees in a commercially insured cohort using insurance claims. METHODS: Claims from Virginia Blue Cross and Blue Shield beneficiaries with NSCLC submitted between 1989-1991 were merged with records from the Virginia Cancer Registry (VCR). Data from the VCR identified incident cases, disease stage, and type of tumor. Initial treatment categories were stratified using Physicians' Current Procedural Terminology codes. RESULTS: There were 1706 incident NSCLC patients; 349 were age < or = 64 years ("younger") and 1212 were age > or = 65 years ("elderly"). Having commercial insurance was not associated with any survival advantage compared with national averages at 2 years. In comparison with elderly patients, younger patients more often were treated with surgery for local disease (80.2% vs. 54.8%) and surgery alone or in combination with radiation for regional disease (51.9% vs. 32.0%). Radiation was used more often in elderly patients compared with younger patients with local disease (30.5% vs. 14.0%) but less often in patients with distant disease (76.2% vs. 54.9%). Compared with elderly patients, younger patients presenting with distant disease received more chemotherapy (18.8% vs. 5.1%; P <0.001); late palliative use of chemotherapy or radiation occurred in only 4-8% of younger patients. Compared with elderly patients, younger patients with regional or distant disease spent more days in the hospital (compared with national averages at 2 years: regional disease, 30.0 vs. 23.9 days; distant disease, 33.0 vs. 21.4 days; P <0.0001). CONCLUSIONS: The results of this study show that more comprehensive health insurance is not associated with better outcomes in patients with NSCLC. Age specific trends for greater use of surgery, radiation, and total hospitalization in younger patients is consistent with other reports. Commercial health care claims supplemented by clinical staging from cancer registries can address long term practice patterns in patients with cancer.

Aged↗
PubMed1991

Medigap preferred provider organizations: issues, implications, and early experience.

The Health Care Financing Administration is sponsoring the Medicare Physician Preferred Provider Organization (PPO) Demonstration to assess the feasibility and desirability of including a PPO option under Medicare. Two sites are currently operational. At one site, Blue Cross and Blue Shield of Arizona is offering a PPO linked with a medigap insurance plan. This "medigap PPO" and its initial experience are described, and a preliminary assessment of the viability and effectiveness of medigap PPOs nationally is provided. Impediments to the development and effectiveness of medigap PPOs are identified and possible government actions discussed.

Aged↗
PubMed1990

Medicare program; establishing procedures for transmitting information between Medicare carriers and Medicare supplemental insurers--HCFA. General notice.

This notice announces and describes the procedure for the automatic transfer of claims information from Medicare carriers to Medicare supplemental (Medigap) insurers when a beneficiary has assigned his or her right of payment to a participating physician or supplier. It delineates the roles of the Medicare carriers, Medigap insurers, State insurance departments, beneficiaries, physicians and suppliers, and HCFA. The procedure for the automatic transfer of claims is required by section 1842(h)(3)(B) of the Social Security Act, as added by section 4081(a) of the Omnibus Budget Reconciliation Act of 1987 and is intended to speed payment of Medicare supplemental insurance benefits to participating physicians and suppliers.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed2003

Health status and heterogeneity of cost-sharing responsiveness: how do sick people respond to cost-sharing?

This paper examines whether the responsiveness of health care utilization to cost-sharing varies by health status and the implications of such heterogeneity. First, we show theoretically that if health care utilization of those in poor health is less responsive to cost sharing, this, combined with the skewness of health expenditures in health status, leads to overestimates of the effect of cost sharing. This bias is exacerbated when elasticities are generalized to populations with greater expenditure skewness. Second, we show empirically that cost-sharing responsiveness does differ by health status using data from the Medicare Current Beneficiary Survey. Medicare beneficiaries are stratified into health status groups based on activity of daily living (ADL) impairments and self-reported health status. Separately, for each of the health status groups, we estimate the effect of Medigap insurance on Part B utilization using a two-part expenditure model. We find that the change in expenditures associated with Medigap is smaller for those in poorer health. For example, when stratified using ADLs, Medigap insurance increases expenditures for 'healthy' groups by 36.4%, while the increase for the 'sick' group is 12.7%. Results are qualitatively the same for different forms of supplemental insurance and different methods of health status stratification. We develop a test to demonstrate that adjusting our results for selection bias would result in estimates of greater heterogeneity. Our results imply that a lowerbound estimate of the bias from neglecting heterogeneity is about 2-7%.

Activities of Daily Living↗
PubMed1992

Medicare: looking for pareto optimal changes.

Medicare enrollees are at risk for potentially unlimited out-of-pocket costs for acute care, defined here as prescription drug costs and copayments on covered services. As a result, many enrollees supplement Medicare with Medigap insurance, which increases their premium costs and their use of Medicare-covered services. The objective of this study was to limit enrollees' risk for acute care costs without increasing federal spending. The study found that savings from prohibiting Medigap would be sufficient to provide a copayment cap under Medicare. If Medicare's copayment requirements were also restructured, the savings would finance a prescription drug benefit as well. Most enrollees could expect lower expenses for premiums and out-of-pocket costs combined, but expenses would be significantly higher for 5% of enrollees, all current Medigap policyholders.

Acute Disease↗