Variation and Trends in Medigap Premiums. Variation in Premiums across States and Plan Types

12/16/2011

Using data from all Medigap policies in 2008, we estimated models to explain variation in Medigap premiums.  The key results are:

  1. Medicare spending per beneficiary at the state level is an important factor: a 10 percent increase in Medicare spending per capita at the state level was associated with a 6 percent higher Medigap premium.
  2. Older and individual policies were on average more expensive than newer and group policies, respectively.
  3. Policies with a greater number of covered lives were on average less expensive.
  4. Our measure of insurance market concentration was not a significant predictor in general, but was positively associated with premiums for C plans. That is, C plan premiums were higher in more concentrated markets.
  5. Premiums for plans in states where the majority of policies were issue‐age rated were about 7 percent lower than plans in states where the majority of plans were attained‐age rated.

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