Medicare Supplemental Coverage Tied to Fewer Cost-Related Hurdles

July 01, 2021 - Medicare Advantage beneficiaries experience higher rates of problems related to healthcare spending compared to traditional Medicare beneficiaries who have Medicare supplemental coverage, according to a Kaiser Family Foundation issue brief.

The number of Medicare Advantage members has increased in the past few years, despite the fact that certain aspects of these private plans can lead to more spending-related problems. KFF reported on the frequency of these problems, including trouble accessing care, delays in care due to costs, and issues with paying medical bills.

Data from the 2018 Medicare Current Beneficiary Survey provided insight on Medicare beneficiaries in three different groups: Medicare Advantage, traditional Medicare without supplemental coverage, and traditional Medicare with supplemental coverage such as Medicaid and Medigap.

Overall, traditional Medicare beneficiaries who did not have supplemental coverage experienced the highest rate of cost-related problems. But when compared to traditional Medicare overall, including members with supplemental coverage, Medicare Advantage members had a higher rate. Within this comparison, other factors such as age, race, and health status influenced the rate of problems as well.

While 19 percent of Medicare Advantage beneficiaries reported encountering healthcare spending-related problems, 15 percent of traditional Medicare beneficiaries reported facing problems. When singling out traditional Medicare members who had supplemental coverage, the number drops further to 12 percent, according to the brief.

This pattern remained consistent even when the study considered additional factors. In beneficiaries who reported to be in fair or poor health, 39 percent of Medicare Advantage beneficiaries had problems, compared to 31 percent of overall traditional Medicare beneficiaries and 27 percent of traditional Medicare beneficiaries with supplemental coverage.

Almost half (47 percent) of all Medicare Advantage beneficiaries under age 65 reported healthcare spending problems, compared to 39 percent of traditional Medicare beneficiaries overall and 32 percent of traditional Medicare beneficiaries with supplemental coverage, according to the brief.

The results showed that traditional Medicare beneficiaries who had supplemental coverage had the most stability with their healthcare spending, indicating that supplemental coverage is a key component when it comes to receiving affordable healthcare.

Medicare Advantage plans provide an out-of-pocket healthcare spending limit and many beneficiaries do not have a premium except for the Plan B premium that all Medicare members must pay. However, other plan aspects can ultimately lead members to face cost-related problems.

“Medicare Advantage plans, like traditional Medicare, generally impose cost-sharing requirements for covered services, subject to certain limits, such as daily copayments for inpatient hospital stays or coinsurance for physicians administered drugs, which means that Medicare Advantage enrollees may incur thousands of dollars in out-of-pocket costs for covered benefits before reaching their plan’s maximum out-of-pocket limit,” the brief explained.

For traditional Medicare enrollees, Medigap plans and Medicaid as supplemental coverage can cover some deductibles and cost-sharing requirements, saving these members money in the long run.

Traditional Medicare members who do not have supplemental coverage do not have an out-of-pocket healthcare spending limit and the breadth of coverage offered is significantly lacking compared to Medicare Advantage plans.

Supplemental coverage in traditional Medicare plans was the main factor in the rates of cost-related problems, but members’ race notably influenced the outcomes as well. Nearly one in three Black Medicare Advantage beneficiaries indicated they experienced cost-related problems, double the amount of their white counterparts. The rates increased for Black beneficiaries in both the ‘fair or poor health’ and the under 65 scenarios.

For Black Medicare Advantage members, the rate of experiencing problems was highest in members who indicated that they were in fair or poor health, with the rate at 50 percent. Among beneficiaries under age 65, 49 percent of Black beneficiaries reported problems, only slightly higher than the 48 percent of white beneficiaries.

Medicare plan type and the presence or absence of supplemental coverage had a clear impact on the data, but the brief noted that factors such as racial care disparities, access to transportation, and other social determinants of health can largely influence the number of cost-related problems that members face.

Lowering the Medicare age of eligibility and expanding coverage under the current Medicare and Medicare Advantage plans could potentially address the financial difficulties that members encounter as well.