Medicare spending by beneficiaries with various types of supplemental insurance

The authors analyzed Medicare spending by elderly noninstitutionalized Medi care beneficiaries with and without supplemental insurance such as Medigap, employer-sponsored plans, and Medicaid. Use of a detailed survey of Medica re beneficiaries and their Medicare health insurance claims enabled the aut hors to control for health status, chronic additions,functional limitations , and other factors that explain spending variations across supplemental in surance categories. The authors found that supplemental insurance was assoc iated with a higher probability and level of Medicare spending, particularl y for Part B services. Beneficiaries with both Medigap and employer plans h ad the highest levels of spending ceteris paribus, suggesting a possible mo ral hazard effect of insurance. Findings from this study are discussed in t he context of the overall financing of health care for the elderly.