Document Type

Research Report

Publication Date



The purpose of health insurance is to spread risk. The system works under the assumption that, at any given point in time, only a percentage of the people in a given group will be sick. Regardless of health status, all members of the group will be paying premiums in order to cover the cost of care for those who need it.

As a group, however, seniors represent a high-risk population. They are more likely than younger people to need health care services and tend to require longer hospital stays. Yet, while their expenses are greater, their financial resources are generally more limited. Seniors are falling victim to their double vulnerability in the areas of health and income.

As the only insurer in Massachusetts required to offer Medicare Supplemental Insurance (Medigap), Blue Cross and Blue Shield (BC/BS) has historically been the major provider of such coverage. Today, however, rising health care costs combined with the declining competitiveness of BC/BS are producing expensive Medigap premiums that many people cannot afford. Growing numbers of Massachusetts' elders are without adequate health care coverage.

In 1990 alone, close to 40,000 Massachusetts seniors either dropped or downgraded their nongroup BC/BS supplemental coverage. The rising premium rates are causing some seniors to assume the health and financial risk of being underinsured. Other seniors with inadequate coverage are being forced to choose between foregoing necessary medical care or shouldering huge out-of-pocket costs.

In this report, we investigate the cost and enrollment trends in Medigap insurance over the past ten years, particularly those in BC/BS, and identify some of the systemic problems of Medigap in the context of the Massachusetts insurance market. Finally, we look at some possible directions for Medigap insurance reform.



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