Medigap Regulations Provide Protections For Beneficiaries, Especially After Health Shocks, But May Raise Premiums

Regulations for guaranteed issue and community rating for Medigap (supplemental) plans protect Medicare beneficiaries who want to leave the Medicare Advantage program from medical underwriting. These regulations, adopted in a handful of states, may be particularly valuable for beneficiaries with health shocks, defined as being newly diagnosed with a serious illness. Using a 20 percent random sample of Medicare beneficiaries from the period 2015-19, we found that disenrollment by those with health shocks was 2.75 percent in states with both regulations compared to 1.42 percent in states with neither regulation. The analogous estimates were 1.49 percent and 1.28 percent for those without health shocks. Whether these regulations are, on balance, beneficial depends on how one weighs the protection from underwriting against other consequences (such as higher Medigap premiums for low-risk beneficiaries).