Revised Medigap Policies Helped Consumers Purchase Insurance
From 1991 to 1996, researchers with Washington-based PDF Incorporated examined the market for Medicare supplemental insurance (Medigap) before and after OBRA-90, which simplified comparison shopping for Medigap, to determine whether changes introduced in Medigap insurance policies decreased marketing abuses as well as confusion among elderly Americans.
This project was part of the Robert Wood Johnson Foundation (RWJF) national program Changes in Health Care Financing and Organization (HCFO) (for more information see Grant Results).
- Researchers found that consumers reported better understanding of which Medigap policies offer the most value for their money and appear to be spending more on Medigap policies after standardization because they are purchasing coverage with more benefits.
- Even so, they are less likely to purchase coverage for preventive care, at-home recovery, or prescription drugs.
RWJF supported this project through a grant of $352,149 to PDF Incorporated.
The Omnibus Budget Reconciliation Act of 1990 (OBRA-90) simplified comparison shopping for Medicare supplemental insurance, commonly known as Medigap.
This four-year evaluation project examined the Medigap market before and after OBRA-90, to determine whether changes introduced in Medigap insurance policies decreased marketing abuses as well as the confusion elderly Americans often face when purchasing coverage. In California, Florida, Minnesota, Missouri, New York, South Carolina, Texas, Washington, and Wisconsin, the evaluation assessed how changes in Medigap insurance affected:
- Medigap insurance products.
- Access to and affordability of Medigap policies for beneficiaries.
- The structure and operations of the insurance carriers that sell Medigap coverage.
Assessment tracked and compared implementation under different regulatory structures; interviewed consumers before and after the implementation of OBRA-90 to assess their awareness of and reaction to changes in Medigap insurance; and analyzed the impact of legislative changes on several existing Medigap policies.
- Consumers report having an easier time understanding which Medigap policies offer the most value for their money.
- Nearly three-fourths of Medigap consumers purchase plans that provide coverage for hospital care, skilled nursing home care, and physician services, and are less likely to purchase coverage for preventive care, at-home recovery, or prescription drugs.
- Consumers appear to be spending more on Medigap policies after standardization, partly because they are seeking out and purchasing coverage with more benefits (e.g., coverage of non-assigned physician charges).
- Insurers are dissatisfied that some types of coverage options disappeared under OBRA-90. Policies that reimburse only those expenses above a very large deductible are no longer available.
The researchers recommend that future policymaking efforts address:
- Standardization of catastrophic coverage.
- Differences in the regulation of managed care organizations and indemnity carriers that operate in the Medigap market.
- Waivers allowing enrollees who purchase coverage with fewer benefits to bypass existing requirements for medical screening.
- Methods for reducing the administrative burden on carriers, such as standardizing the actual wording of insurance policies and thereby precluding state variations.
The study team produced two articles, published in the Journal of Health Policy, Politics, and Law and the Journal of Aging and Social Policy (see the Bibliography).
GRANT DETAILS & CONTACT INFORMATION
Evaluation of the Medicare Supplementary Insurance Reform Legislation
PDF Incorporated (Washington, DC)
Dates: September 1991 to July 1996
Project Director: Peter D. Fox, Ph.D.
(Current as of date of this report; as provided by grantee organization; not verified by RWJF; items not available from RWJF.)
Meyer JA, Silow-Carroll S, Tillmann IA and Rybowski LS. Employer Coalition Initiatives in Health Care Purchasing - Vol. 1. Washington: Economic and Social Research Institute, February 1996.
Meyer JA, Silow-Carroll S, Tillmann IA and Rybowski LS. Employer Coalition Initiatives in Health Care Purchasing - Vol. 2. Washington: Economic and Social Research Institute, September 1996.
Health Care Financing and Organization Findings Brief. "ESRI Study Explores Potential of Value-Based Purchasing in Employer-Based Coalitions." Volume 1, Issue 1. December 1996.
Report prepared by: Karin Gillespie
Reviewed by: Marian Bass
Reviewed by: Molly McKaughan
Program Officer: Nancy L. Barrand