plan J, which is available in Vermont and provides more generous benefits than plan I.
Plan J was only slightly more expensive than plan H. This estimate also probably errs on
the side of being slightly too expensive.
1
Note that Connecticut and Massachusetts require a six month open enrollment period for the under-65 disabled population, but not for under-65 ESRD beneficiaries.
2
U. S. Health Care Financing Administration, Department of Health and Human Services, A Profile of Medicare: Chart Book 1998
(Washington, DC: GPO, May 1998), p. 47. 3
American Association of Retired Persons, The AARP Public Policy Agendafor 1996, quoted in “The Crushing Costs of Medicare Supplemental Policies,” (Washington: Families USA, October 1996 <http://epn.org/families/famsup.html>), p. 2.
4
U.S. Dept. of Health and Human Services, Health Care Financing Administration. MEDICARE CURRENT BENEFICIARY SURVEY, CALENDAR YEAR 1991: [UNITED STATES] [Computer file]. Baltimore, MD: U.S. Dept. of Health and Human Services, Health Care Financing Administration [producer], 1992. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 1993.
5
Fifty-seven percent of the under-65 Medicare population have incomes under $10,000 per year, compared to 34 percent of the elderly population. Mary A. Laschober and Gary L. Olin, Health & Health Care of the Medicare Population: Data from the 1992 Medicare Current Beneficiary Survey (Rockville, MD: Westat, Inc, November 1996), p. 49.
6
U.S. Health Care Financing Administration, A Profile of Medicare: Chart Book 1998 (Washington, DC: GPO, May 1998), p. 51. 7
U.S. Dept. of Health and Human Services, Health Care Financing Administration. MEDICARE CURRENT BENEFICIARY SURVEY, CALENDAR YEAR 1991: [UNITED STATES] [Computer file]. Baltimore, MD: U.S. Dept. of Health and Human Services, Health Care Financing Administration [producer], 1992. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 1993.
8
William Weller, Estimated Impact of H.R. 625/S. 302 on Medigap Premiums: An Actuarial Analysis (Washington: Health Insurance Association of America, April 1997).
9
See the description of the standard Medigap plans in Appendices 1 and 2. 10
U.S. Health Care Financing Administration, A Profile of Medicare: Chart Book 1998 (Washington, DC: GPO, May 1988). 1
An alternative approach would be to analyze premiums in open-enrollment states over time to gauge whether the passage of open- enrollment laws had an effect on premiums. This time-series approach was not chosen for two reasons: accurate historical data on Medigap premiums is extremely difficult to gather; and the high growth rate of Medigap premiums nationwide would make it difficult or impossible to disentangle the effect of the passage of open-enrollment laws from secular trends.
2
National Association of Insurance Commissioners, Medicare Supplement Loss Ratios in 1996 (Kansas City, MO: NAIC, Dec. 1997). 3
Cardiac Rhythm Management Group, Reimbursement Update, First Quarter 1998 (Guidant Corportion <http://www.guidant.com/crm/physician/ReimbUpdate/98-1.htm).
4
United States Congress, “Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means,”
1998 Green Book (Washington: GPO, 1998). 1
If an insurer does not offer a certain plan, that observation was dropped. 2
Abt Associates Inc. The Impact of Expanded Medigap Eligibility
3
The average premium charged by Banker's Life and Casualty for plan I is $4399. The average premium charged by other insurers for plan I is $1778.
4
This is equivalent to creating a dummy variable equal to one if the premium is from the District of Columbia and zero if from any other state. The effect of state-level regulations (i.e. open enrollment vs. non-open enrollment) in the District of Columbia is therefore obscured (note that the District of Columbia is not an open-enrollment state). The observations for the District of Columbia were kept in the dataset because they do help estimate insurer-level effects and the effects of pricing methods.
5
Insurers' market shares are taken from the National Association of Insurance Commissioners, Medicare Supplement Loss Ratios in 1996 (Kansas City, MO: NAIC, Dec. 1997). The number of beneficiaries in each state is taken from United States Congress, “Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means,” 1998 Green Book (Washington: GPO, 1998). The proportion choosing each type of plan is taken from Ettner, S. L., “Adverse Selection and the
Journal of Health Economics, 1997. 6
Both Oklahoma and Louisiana only require that insurers offer one plan of the insurer’s choice to enrollees under 65. For both of these states it was assumed that insurers would choose to offer only plan A to enrollees under 65.
7
The estimated impact using the plan-specific open enrollment dummy variable is 2.1%, whereas the estimated impact using the state- level open enrollment dummy variable is 1.0%.
8
The three ways states can require that premiums for enrollees under 65 to be pooled are: mandate that insurers charge enrollees under 65 a premium no higher than the premium for enrollees aged 65; mandate that insurers charge enrollees under 65 a premium no higher than the average premium charged to all enrollees over 65; or mandate that all insurers use community rating for all ages. (See Appendix 3 for details of each state's regulations.)
1
Some states require an open enrollment period only for certain types of Medigap policies (see Appendix 3 for details). Premiums for policy types not included in the state’s open enrollment requirement were excluded from these analyses.
2
See Weller, 1997. 1
U.S. Health Care Financing Administration, A Profile of Medicare: Chartbook 1998 (Washington, DC: GPO, 1998). 2
Medicare rules for patient cost sharing liability are complicated, but for outpatient services (Part B) include a nominal deductible along with a 20 percent copayment for approved charges. Inpatient (Part A) services require a deductible which approximates the allowed charge for the first inpatient day. Additional cost sharing requirements accrue for hospital stays longer than 60 days. 3
U.S. Health Care Financing Administration, Health Care Financing Review, 1996 Medicare and Medicaid Statistical Supplement
(Washington, DC: GPO, 1997), p. 223. 4
Figures were adjusted to 1998 dollars based on projections from HCFA. 5
This figure was calculated based on Tables K1-K5 of the United States Renal Data System 1998 Reference Tables (Internet address http://www.med.umich.edu/usrds/adrtab/k_1.txt). It excludes costs that are treated as pass-throughs by Medicare, such as for the institutional acquisition cost for all Medicare transplants and other "pass through" amounts.
6
The USRDS estimated patient cost sharing liability as 18 percent of the sum of Medicare payments and beneficiary cost sharing liability-- see Chapter 10 of the 1985 USRDS Research Report.
7
Projected costs for 1998 were based on the change in allowed charges per ESRD enrollee observed from 1995-1996, as reported in the USRDS 1998 Reference Tables.
8
U.S. Health Care Financing Administration, 1996 HCFA Statistics (Washington, DC: GPO, 1997). 9
Mary A. Laschober and Gary L. Olin, Health & Health Care of the Medicare Population: Data from the 1992 Medicare Current Beneficiary Survey (Rockville, MD: Westat, Inc., November 1996), and U.S. Health Care Financing Administration, A Profile of Medicare: Chartbook 1998.
10
Laschober and Olin (1996), p. 64. Among those in the fee-for-service system and excluding the dually eligible, 68 percent of those without employer sponsored supplemental coverage purchased a Medigap policy, compared to 12 percent of those with supplemental coverage through a current or former employer.
11
Laschober and Olin (1996), p. 64. Excluding the dually eligible, 18 percent of managed care enrollees had Medigap coverage, compared to 41 percent of beneficiaries in the fee-for-service system.
Abt Associates Inc. The Impact of Expanded Medigap Eligibility
12
Calculated from Lashober and Olin (1996), p. 64. 13
It may even be the case that some dually eligible ESRD patients would acquire Medigap coverage indirectly, if states elect to purchase Medigap for their Medicaid enrollees. Our contacts with state Medicaid programs suggested that this type of buy-in is likely to occur infrequently.
14
These estimates are based on data from HCFA’s A Profile of Medicare: Chartbook 1998, page 48. 15
Lashober and Olin (1996), page 62. 16
According to Laschober and Olin (1996), p. 49, 53 percent of disabled beneficiaries have an annual income of $10,000 or less, compared to 27 percent of 65-75 year olds and 38 percent of 75-84 year olds. Of those with no other type of supplemental coverage, less than 60 percent of those with income less than $10,000 had Medigap coverage, compared to more than 70 percent of those with income above $10,000.
17
Ettner, S. L., “Adverse Selection and the Purchase of Medigap Insurance by the Elderly,” Journal of Health Economics, 1997. 18
Browne, M. J., and H. Doerpinghaus, “Asymmetric Information and the Demand for Medigap Insurance,” Inquiry, 31(4): 445-450. 19
Thamer et al. examined the proportion of dually eligible ESRD patients in three states: California, Georgia, and Michigan. In December 1991, excluding those who were not Medicare-eligible, the proportion of dually eligible ESRD patients was 47 percent in California, 19 percent in Georgia, and 27 percent in Michigan. Their data do not separately report Medicaid eligibility for the under- 65 population.
20
According to Laschober and Olin (1996), p. 62, about 14 percent of aged Medicare beneficiaries with employer sponsored supplemental insurance also had a Medigap policy.
21
Few studies have estimated the relationship between expected health care expenditures and purchase of Medigap coverage. Chulis et al. (1993), using data from the MCBS, found that, among those with employer sponsored supplemental coverage, those who used reimbursed services during the past year were 1.3 times as likely to also purchase Medigap as those who used no reimbursed services. Hopkins and Kidd (1996), using data from the Australia Medicare program, found that, adjusting for other factors, an individual who had seen a doctor in the past two weeks and was hospitalized in the past year (their proxy for medical costs) had a 78.9 percent chance of purchasing supplemental insurance, compared to a 63.4 percent probability for an otherwise identical individual who had not been to the doctor and hospitalized during the specified interval.
22
According to the Abt Associates survey, 75 percent of under-65 beneficiaries reported that they were no longer working, or were working less than before dialysis first began.
23
According to Mary Beth Callahan, Chair of the National Kidney Foundation Council of Nephrology Social Workers, most ESRD patients who purchase Medigap select plan A, particularly if a dialysis company is subsidizing the cost of the policy. She states that “it is rare” for an individual to buy a policy with drug coverage (written communication, September 15, 1998)
24
This figure was based on average loss ratios over the past five years. Because the loss ratios for Medigap insurers tend to fluctuate considerably from year to year, we decided to use the average over a longer period of time. The percentage estimates of the impact of a six month open enrollment period on premiums are invariant to the loss ratio used.
25
Weller (1997) found that policyholders in plans H and I (which include a drug benefit) were 28% higher than those in plans C and F. We used this figure in our simulation model to reflect the higher medical costs for those that have Medigap plans that include a prescription drug benefit.
1
Massachusetts Guide to Health Insurance for People with Medicare (Boston: The Division of Insurance and The Executive Office of Elder Affairs of the Commonwealth of Massachusetts, 1997).
2
Medicare Supplement Insurance: Guide to Comparing Insurance Rates (St. Paul, MN: Minnesota Department of Commerce, Spring 1997), pp. 8-10.
1
Ibid., p. 10. 2
Medicare Supplement Insurance Approved Policies (Madison, WI: Wisconsin Office of the Commissioner of Insurance, April 1998), pp 5- 6.
3
Abt Associates Inc. The Impact of Expanded Medigap Eligibility
4
Ibid. 5
Guide to Health Insurance for Delaware Senior Citizens (Dover, DE: State of Delaware Insurance Department, 1998), p.3.
6
Consumer Tips: Shopping for Medicare Supplement Insurance (Montpelier, VT: Vermont Department of Banking, Insurance, Securities & Health Care Administration, February 1998), p. 7.