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Medigap and the Medicare “Doc Fix”

The House-passed legislation to repeal the Medicare Sustainable Growth Rate (SGR) includes a provision that would prohibit Medicare supplemental insurance (Medigap) policies from covering the Part B deductible for people who become eligible for Medicare beginning in 2020. A new Kaiser Family Foundation Data Note explores the implications of this proposal and finds that about 10 percent of 65-year olds on Medicare would have been affected in 2010 (the most recent year for which data are available) had the provision taken effect that year.  The Medigap proposal, estimated by the Congressional Budget Office (CBO) to trim federal spending by $400 million between 2020 and 2025, is expected to lead to a reduction in the use of medical services by making future Medigap purchasers more price-sensitive.

The Data Note also charts the steady decline in Medigap enrollment and rise in Medicare Advantage enrollment among 65-year-old beneficiaries in recent years, a trend that could be accelerated by this proposal.  For the full Data Note, and other data and analyses about the Medicare SGR “doc fix,” visit kff.org.