A Medicare Benefits Update Could Cut Medigap Sales: GAO

February 14, 2018

Medicare, Medicare Supplement

By Allison Bell

Analysts at the U.S. Government Accountability Office say modernizing the traditional Medicare fee-for-service program benefits design could help cut many enrollees’ costs, discourage unnecessary use of care, and reduce demand for Medicare supplement (Medigap) insurance.

About 81% of Medicare fee-for-service enrollees now use some kind of public or private arrangement to cap their maximum out-of-pocket spending, and to cope with ordinary deductible, co-payment and coinsurance bills, according to GAO analysts.

About 31% of Medicare fee-for-service enrollees use Medigap coverage from private insurers, with an average annual premium of $2,400 per enrollee.

If the Medicare fee-for-service program offered enrollees the kind of annual out-of-pocket spending cap that Affordable Care Act-compliant private major medical plans now provide, “the addition of an annual cap would reduce the need of some beneficiaries to purchase supplemental insurance,” James Cosgrove, a GAO director, writes in a new GAO report. Read more…