Medigap Enrollment Reaches 10.2 Million/20 Percent of Medicare Recipients

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MedicareMall.com examines possible implications of the continued increase in Medigap enrollment nationwide. With enrollment in Medicare supplement plans now exceeding 10 million—or about 20 percent of people on Medicare—it appears that the Medicare program is at a crossroads.

With the 65-and-over demographic growing at a rate of about 1.4 million people a year, observers expect Medicare supplement enrollment to continue increasing significantly in coming years.

America’s Health Insurance Plans (AHIP) reports that the number of Americans enrolled in Medicare supplement plans, following a steady increase in recent years, now exceeds 10 million. The exact figure reported by AHIP is 10.2 million as of December 2012. This figure represents 20 percent of the total Medicare population.*1

The increase is generally attributed to widespread recognition that the gaps in Original Medicare coverage—such as deductible, copayment, and coinsurance charges—often cause hardship to people on Medicare without supplement insurance. With the 65-and-over demographic growing at a rate of about 1.4 million people a year, observers expect Medicare supplement, or Medigap, enrollment to continue increasing significantly in coming years.

Medicare was established in 1965 as a government-operated program. While some Medicare recipients depended on private insurance alongside Medicare during the program’s early years, for the most part older Americans depended on the government to provide their healthcare.

Over time, private companies came to play a role in Medicare, and the recent rise in Medigap enrollment seems to indicate a widespread belief that private companies are essential to Medicare.

With the growing acceptance of private insurance companies as major players in the Medicare system, it appears that market forces may come to play a more major role in Medicare. Currently, private companies have the authority to set many of their own guidelines with regard to underwriting and pricing of Medicare plans, although the government continues to determine what the plans must cover.

Insurance companies apply factors such as age, gender, location, and health history in setting individual rates for Medicare supplement plans. For example, Medigap premiums tend to rise with age, men tend to pay higher premiums than women, and so on.

In some ways, Medicare appears to be at a crossroads—and it remains to be seen whether market forces come to play an even greater role in the program, or whether the government makes a renewed effort to assert its authority over Medicare.

*1 http://www.ahip.org/Trends-Medigap-Coverage-Enroll2012/

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Richard Thompson
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