A Balanced and Fair Medigap Market Benefits Consumers, Reflects New Realities for Medicare Beneficiaries

Andrew Hetzel

| 2 min read

Blue Cross Blue Shield of Michigan’s move away from subsidized rates for its Medicare supplement plans (Legacy Medigap) toward market-based pricing supports the new realities of today’s modern Medicare marketplace. Medicare has changed significantly, and offers numerous coverage options for seniors and persons with disabilities.
  • Medigap is not the only choice Medicare beneficiaries have today. In 1980 – when subsidies began – Medigap was the only vehicle for seniors and persons with disabilities to make their Medicare coverage “whole.” Back then, state policymakers had a special interest in creating a safety net subsidy program through Blue Cross to help beneficiaries afford coverage. Today, Medicare Advantage plans provide expanded coverage that combines Medicare Parts A and B, Part D drug coverage, plus supplemental coverage, and additional benefits like dental and vision coverage. Offered by a number of competing health insurance companies, these plans are very popular in Michigan today. The bottom line is that the market has changed to offer more comprehensive coverage options and more choice to Medicare consumers in Michigan.
  • Consumers benefit from a fair and balanced Medigap marketplace. Consumers benefit from a marketplace where companies compete on a level playing field for their business. Because Blue Cross’ subsidies significantly reduce the price of its Medigap product, Blue Cross had a competitive advantage over other companies in attracting and retaining membership. In fact, Blue Cross currently has more than twice the number of Medigap members as the next closest competitor. The Michigan Health Endowment Fund recently reinforced the importance of market fairness. Now responsible for providing subsidies to lower-income (adjusted gross income) Medigap customers, the Endowment Fund determined that the subsidy program is available to customers of multiple insurance companies – not just Blue Cross’ customers.
  • Subsidies remain available to those most in need. In reforming Blue Cross’ regulations to require the company to pay taxes and make payments totaling $1.56 billion to the Michigan Health Endowment Fund, state policymakers made sure that Medigap subsidies were part of the Endowment Fund’s mission to help the vulnerable. Starting January 1, 2017, subsidies for Medigap will be available to Medigap enrollees whose annual household incomes (adjusted gross incomes) are below $26,730 for an individual or below $36,045 for a couple.
Y0074_O_MAMedigapblog CMS Accepted 07102016 Medicare Plus BlueSM, BCN AdvantageSM and Prescription BlueSM are PPO, HMO-POS, HMO and PDP plans with a Medicare contract. Enrollment in Medicare Plus Blue, BCN Advantage and Prescription Blue depends on contract renewal. Photo credit: Hans Splinter
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