Healthcare Business News

Medigap reform options would mean higher costs for enrollees: report

By Jessica Zigmond
Posted: July 20, 2011 - 12:00 pm ET

A new report from the Kaiser Family Foundation (PDF) analyzed three potential Medigap-reform scenarios and found that all options could save between $1.5 billion and $4.6 billion in Medicare spending in a single year—and also result in increased out-of-pocket spending for enrollees.

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In several current deficit-reduction proposals, the report says, policymakers would prohibit Medigap—the private supplemental insurance policies sold to Medicare beneficiaries—from covering all of enrollees' out-of-pocket Medicare costs, which the Kaiser analysis said would expose enrollees to a larger share of Medicare's cost-sharing requirements. Researchers examined three options for changing Medigap, including one based on a proposal from the non-partisan Congressional Budget Office.

“Each of the three Medigap reform options would be expected to achieve Medicare savings—primarily by inducing Medigap enrollees to curtail their use of Medicare-covered services, which in turn reduces federal Medicare spending,” according to the report, which added that these findings are based on specific assumptions. If those predictions are wrong, the study said, then there might not be savings to the Medicare program.

Researchers also found that changes in Medigap could expose about one in five Medigap enrollees to higher out-of-pocket costs and that those increases would disproportionately affect policyholders who are in poor health and have modest incomes.

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