NCPA - National Center for Policy Analysis

Decline In Dual Coverage For Medicare Is More Than Managed Care

July 20, 2000

Medicare, the federal health insurance program for the elderly and disabled, provides fewer benefits than other health plans, so many Medicare beneficiaries have a supplemental source of coverage, known as dual coverage. The supplemental sources can be private -- supplemental coverage by a former employer or individually purchased "Medigap" policies, or public programs such as Medicaid, the federal/state program for the poor.

  • Medicare beneficiaries increased from 30.2 million to 31.1 million between 1994 and 1998, while the number of beneficiaries without an additional source of coverage increased from 6.9 million to 9.2 million, a jump of 33 percent.
  • Most of this increase results from a decrease in beneficiaries who purchased private "Medigap" policies, because the numbers in employer and public plans remained relatively constant.

There are also demographic distinctions among those that do not have a supplemental source of coverage.

  • The percent of Medicare beneficiaries without supplemental coverage rose from 20.7 percent of those between 65 and 69 to 40 percent for those over 85.
  • Minorities are more likely to not have supplemental coverage -- 44.7 percent of blacks and 44.6 percent of Hispanics as compared to 33.6 percent of other races.
  • Beneficiaries closest to poverty level are most likely not to have coverage.
  • Male beneficiaries are more likely to have supplemental coverage than females.

One explanation for the decline in dually covered beneficiaries is the increased availability of managed care plans. These serve as substitutes for traditional supplemental coverage because they generally covered the same benefits. From 1994 to 1998, enrollment in Medicare managed care plans rose from 3.1 million to 6.6 million. These numbers appear to show that as enrollment in Medicare managed care rose, the purchase of "Medigap" coverage decreased.

However, in 1998 this apparent trend faded away as the number without a supplemental source increased while the number enrolling in managed care slowed significantly, indicating that the increase in those without additional coverage is more than just having benefits provided in a different manner.

Source: Craig Copeland, "Medicare Beneficiaries With Dual Sources of Coverage," EBRI Notes, February 2000, Employee Benefit Research Institute (EBRI), 2121 K Street N.W., Suite 600, Washington, D.C. 20037, (202) 659-0670.


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