By David J. Meyers, Amal N. Trivedi, and Vincent Mor
Health Affairs, May 2019
In all but eight states, Medicare supplemental coverage (or Medigap) plans may deny coverage or charge higher premiums on the basis of preexisting health conditions. This may particularly affect chronically ill or high-need Medicare Advantage enrollees who switch to traditional Medicare and subsequently discover that they are unable to purchase affordable Medigap coverage. We found that in states with no Medigap consumer protections, high-need Medicare Advantage enrollees had a 16.9-percentage-point higher reenrollment rate in Medicare Advantage in the year after switching to traditional Medicare, compared to high-need enrollees in states with strong Medigap consumer protections—namely, guaranteed issue and community rating (charging all enrollees the same premium regardless of health condition). Expanding protections in the Medigap market may increase consumers’ access to this type of supplemental coverage.
From the Discussion
MA enrollees might not realize that in most states, if they switch to traditional Medicare, they might not be able to get Medigap coverage. Enrollees with higher health care needs are both more likely to leave MA and more likely to be denied access to Medigap coverage. These enrollees may then face out-of-pocket payments in traditional Medicare without any limits, causing financial burden and prompting reenrollment in MA.
Medicare beneficiaries with complex care needs often face a higher burden of costs and may benefit from a greater continuity of care. In most states these enrollees may face significant barriers to enrollment in Medigap that may increase their exposure to high out-of-pocket spending and lead to disruptions in the continuity of care if they need to switch between MA and traditional Medicare.
Additionally, in most states, even if an enrollee with a preexisting condition such as cancer does enroll in Medigap, they might not be able to receive any benefits to cover this condition during the first six months of enrollment. It is important to note that even if an enrollee has access to a Medigap plan, premiums are substantially higher in Medigap than in MA, which may place further limits on Medicare choices for lower-income enrollees.
By Don McCanne, M.D.
This is one more example of where Congress is neglecting the traditional Medicare program, in this case by allowing states to limit the effectiveness of Medigap plans which are required to ensure adequate catastrophic coverage in traditional Medicare. Those with complex problems who are enrolled in the private Medicare Advantage plans often become dissatisfied with their care, turning to traditional Medicare with Medigap backup. As this study reports, in most states affordable Medigap coverage is not guaranteed (if not selected when first becoming eligible for Medicare).
When we speak of an improved Medicare for All, that improvement includes benefits provided by the more generous Medigap plans (plus other uncovered benefits such as vision, hearing and long-term care).
Rather than fight two political battles – on to improve the benefits of the traditional Medicare program and a second to expand the improved Medicare to covering everyone – it would be better to enact and implement a single payer Medicare for All program in one step. The current path of incrementalism is leaving too many broke, sick, and sometimes dead. We have to end that.
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