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Medigap premiums and Medicare HMO enrollment
Catherine G McLaughlin1, Michael Chernew, Erin Fries Taylor
1Department of Health Management & Policy, School of Public Health, The University of Michigan, Ann Arbor 48109-2029, USA.
Health Services Research
|January 28, 2003
Summary
Higher Medigap premiums increase Medicare Advantage (Medicare Health Maintenance Organization) enrollment among seniors. This suggests policies affecting Medigap costs influence Medicare HMO participation.
Area of Science:
- Health Economics
- Gerontology
- Public Health Policy
Background:
- Medicare Health Maintenance Organization (HMO) and Medigap markets are often analyzed separately but are interrelated due to overlapping coverage.
- Both managed care plans and Medigap policies cover services not included in basic Medicare.
- Understanding the relationship between these markets is crucial for evaluating senior healthcare choices.
Purpose of the Study:
- To investigate the impact of Medigap premiums on the likelihood of elderly Medicare beneficiaries enrolling in Medicare HMOs.
- To quantify the relationship between Medigap costs and Medicare managed care plan participation.
Main Methods:
- Utilized data from the 1996-1997 Community Tracking Study (CTS) Household Survey.
- Employed a reduced-form logit model to estimate Medicare HMO participation probability.
- Controlled for individual, market, and HMO characteristics, including Medigap premiums.
Main Results:
- Medigap premiums exhibited significant geographic variation.
- A consistent, strong positive correlation was found between Medigap premiums and Medicare HMO participation.
- Simulations indicated a potential increase of over 8 percentage points in HMO participation with a one standard deviation rise in Medigap premiums.
Conclusions:
- Medigap premiums significantly influence seniors' enrollment in Medicare HMOs.
- Policies designed to lower Medigap premiums may inadvertently decrease Medicare HMO enrollment.
- The interplay between Medigap and Medicare HMO markets necessitates coordinated policy considerations.