Forum Session

Medicare Supplemental Coverage: Weighing the Consequences and Trade-Offs for Medicare Spending and Beneficiaries
December 9, 2011


Kathryn Linehan


As policymakers look for savings from the Medicare program, one option that has been proposed is reducing "first-dollar coverage" for Medicare services offered through privately purchased Medigap policies and other sources of supplemental coverage, such as some employer-based retiree benefits. First-dollar coverage is an insurance benefit that covers all of the cost sharing, such as deductibles or coinsurance, for the use of services. The rationale for proposals to restrict first-dollar coverage comes from the theory that when an individual must pay some amount to obtain health care services, he or she will use less of that service than if the service can be accessed at no cost. These proposals are also grounded in evidence from studies that have found that Medicare beneficiaries with first-dollar coverage use more Medicare services and incur higher costs than those without first-dollar coverage. Reducing first-dollar coverage would, however, create a risk that some individuals may pay more of the cost of their care or forgo necessary services exacerbating their health care needs. This session examined the two most common forms of supplemental coverage for fee-for-service Medicare beneficiaries: employer-based retiree benefits and Medigap insurance. Speakers addressed the benefits they provide, evidence of their effect on service use and spending, proposals to reduce first-dollar coverage, concerns about the effects of those proposals, and related policies, such as altering Medicare’s benefit design.


Kathryn Linehan
Principal Policy Analyst
National Health Policy Forum

George Wagoner, FSA, MAAA
Senior Partner

Christopher Hogan, PhD
Direct Research, LLC

Patricia Neuman, ScD, MS
Vice President and Director
Medicare Policy Project
Kaiser Family Foundation

Slides from the presentations by Ms. Linehan, Mr. Wagoner, Dr. Hogan, and Dr. Neuman are available for download.

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