Health Affairs, 27, no. 2 (2008): 469-477 doi: 10.1377/hlthaff.27.2.469 © 2008 by Project HOPE	New Online   In the News: Health Spending Slowdown   New Issue: Chronic Illness   Top 10 Posts for 2008   Daschle: What to Expect?   Obama on Health IT

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Medigap Coverage And Medicare Spending: A Second Look

Medicare supplemental insurance (Medigap) provides important financial protections for many low- and moderate-income beneficiaries in Medicare’s traditional fee-for-service program. However, conventional wisdom among policymakers holds that Medigap coverage substantially raises Medicare claims costs. This report uses detailed diagnosis data provided by three large Medigap insurers, information from the Medicare Current Beneficiary Survey, and the Medicare 5 percent sample file to reexamine the impact of Medigap coverage on Medicare spending. We conclude that previous studies might have overestimated the impact of Medigap coverage on Medicare costs and that past projections of potential Medicare cost savings from restrictions on Medigap coverage probably are overstated.

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