Medigap Plans Losing Appeal Among Seniors
2010 was the first year that more 65-year-olds entering Medicare selected Medicare Advantage plans over Medigap plans (also known as Medicare Supplement). The appeal of Medicare Advantage plans continues to grow—70%+ increase since the passing of the Affordable Care Act in 2010—and in the next five years, it’s expected that the majority of Medicare beneficiaries nationwide will be enrolled in Medicare Advantage plans.
Medicare Advantage’s rapid growth is unsurprising as it is structurally positioned to deliver seniors with more value than Medigap plans can offer. For example, between 2001 and 2010, average Medigap premiums increased 40% nationally ($127 to $177), whereas between 2010 and 2017, average Medicare Advantage premiums stayed mostly flat ($44 to $36).
This substantial price discrepancy is largely because Medigap premiums are correlated with rising healthcare costs, whereas Medicare Advantage plan premiums are dictated by a complicated mix of federal quality bonuses, bid rebates, and lower underlying utilization costs. Savvy healthcare providers are able to impact these premiums further. For example, Alameda-based Calyx Health, a doctor's office exclusively for Medicare seniors, believes it can maximize federal bonuses and drive down costs enough to begin offering its patients $0 premium plans by 2021.
Medicare Advantage plans also have more flexibility than Medigap plans to construct benefit packages. For example, several Medicare Advantage plans in Alameda County combine dental, vision, hearing, and gym benefits whereas Medigap plan holders need to purchase these benefits separately.
The evolution of Medicare’s business model is changing the landscape of how seniors receive healthcare. Calyx Advantage, a health insurance agency with unique insights on how these national trends affects Alameda County seniors, offers free consultations to help local Medicare beneficiaries find a plan that meets their needs and budget. Medicare’s Annual Enrollment Period (Oct 15-Dec 7) is the time of the year when seniors have the opportunity to change their Medicare plans for 2019. For most beneficiaries, any plan changes need to be made before the December 7th deadline.
Calyx Advantage, a health insurance agency exclusively for Medicare plans, is located in the Alameda South Shore Center. To schedule a FREE consultation, call 474-0515 or click here.