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Medicare Supplement Issuers Keep Claim Ratios Under Control

by Allison Bell Think Advisor, June 2, 2018

Insurers managed to cover more people with Medicare supplement (Medigap) insurance in 2017 while controlling benefits costs.

The number of people with Medigap coverage increased 3.8% between 2016 and 2017, to about 13 million, according to a new report from Mark Farrah Associates.

The ratio of medical claims to premiums fell just slightly, to 77.7%, from 77.%

UnitedHealth Group Inc. and Mutual of Omaha together accounted for about 43% of 2017 Medigap premium revenue.

Analysts at Mark Farrah Associates, a McMurray, Pennsylvania-based health insurance data firm, base their Medigap figures on insurers’ financial statements. Their totals do not include the enrollees in California managed care companies’ plans, because California managed care companies file different forms.

The American Association for Medicare Supplement Insurance, which includes California managed care company data, recently reported that it believes total Medigap use increased to 13.6% in 2017, from 13.1% in 2016.

Congress and Medicare program managers have designed the basic Medicare Part A hospitalization program and the Medicare Part B outpatient and physician services program to have many coverage holes, or “cost-sharing” provisions, both to hold down direct spending and discourage unnecessary use of care.

Traditional Medicare enrollees use Medigap policies to pay the costs the traditional Medicare program does not cover.

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