Study: Medigap policies run up Medicare costs

A new study by economists at the University of Chicago and the University of Texas have concluded that the use of so-called Medigap plans offered by private insurers increases Medicare costs by 22.2 percent. "If someone has Medigap relative to not having Medigap, the public system is going to spend $1,396 more on them a year," Marika Cabral, the University of Texas, told Kaiser Health News. Cabral said that Medigap coverage tends to lead to the overutilization of imaging tests, such as MRIs, and other non-crucial medical procedures. The study's authors suggest a 15 percent tax on Medigap policies intended to discourage overutilization. Article

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