FIRST-DOLLAR MEDICARE SUPPLEMENT PLANS ARE ASSOCIATED WITH HIGHER QUALITY OF CARE

Purpose: First-dollar Medicare Supplement (i.e. Medigap) plans are popular as they do not require a deductible to be met before Medigap coverage begins, allowing individuals to better predict their monthly out-of-pocket healthcare expenditures. Some speculate first-dollar plans promote greater healthcare service use and higher Medicare costs. However, higher utilization may be beneficial if it results in increased quality of care. The objective of this study was to evaluate differences in healthcare use, quality of care, and expenditures associated with first-dollar Medigap plans.

Method: Included were adults with an AARP^® Medicare Supplement Plan insured by UnitedHealthcare Insurance Company (for New York residents, UnitedHealthcare Insurance Company of New York). Plans were categorized as first-dollar (C, F, J), least coverage (A, K, L) and medium coverage (B,D,E,G,H,I,N). Analyses included multivariate modeling of evidence-based medicine (EBM) quality metrics and exponential cost modeling to estimate average expenditures.

Result: Compared with medium coverage plans, individuals with first-dollar plans were about 10% more likely to have higher quality of care; individuals with least coverage plans were about 3% less likely to have higher quality of care. Individuals with first-dollar plans had average total healthcare expenditures 7% higher than individuals with medium coverage plans and 9% higher than individuals with least coverage plans.

Conclusion: This is the first study to show higher quality of care associated with first-dollar plans. Additional research is warranted to determine if improved quality of care is associated with lower future healthcare expenditures.