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New AHIP Study in Health Affairs Challenges Previous Assumptions About Medigap's Impact on Medicare Costs
Date:3/12/2008

AHIP releases new study of Medigap market

WASHINGTON, March 12 /PRNewswire-USNewswire/ -- Groundbreaking research on Medicare supplemental insurance (Medigap) challenges previous assumptions about Medigap's impact on Medicare costs. The new study by America's Health Insurance Plans (AHIP) was published this week in the journal Health Affairs. AHIP also released a new analysis of the Medigap market which found that Medigap enrollment has remained constant in recent years, showing the value this option provides for Medicare beneficiaries.

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"The new data provide a fresh perspective on Medigap coverage and its effect on health care costs in Medicare," said Karen Ignagni, President and CEO of AHIP.

Previous studies have asserted that Medigap policyholders incur as much as 25 percent more Medicare expenditures than beneficiaries with fee-for-service (FFS) Medicare only because Medigap generally provides coverage on a first-dollar basis, meaning it does not require any cost-sharing for beneficiaries.

The AHIP study shows that nearly half of this apparent increase in Medicare expenditures can be explained by controlling for the use of services received through the Veterans Administration (VA) or at military facilities. Thirteen percent of FFS-only beneficiaries relied on the VA or military facilities as their primary source of care, compared to just one percent of Medigap purchasers. These services are not billed to Medicare, causing Medicare costs for FFS-only beneficiaries to appear artificially low compared to beneficiaries with Medigap coverage.

Further, beneficiaries' health status may explain much of the remaining difference in health costs between these two groups. Previous studies argued that Medigap policyholders were healthier than FFS-only beneficiaries. These s
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SOURCE America's Health Insurance Plans
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