Medigap: should private insurers pay public rates and who should make the decision?

Abstract

The most complex issues in the field of healthcare policy can often be reduced to the simple question “who is going to pay?” Legislatures, whether at the state or national level, are generally the entity responsible for allocating healthcare costs. When a legislative body acts to allocate healthcare costs, it simultaneously amends a society-wide, interwoven web of regulation and incentives that is steeped in decades of tradition. Further, and perhaps more importantly, healthcare cost allocation affects each individual in our society on an intimate level. Medicare is one of the most controversial elements in this grand scheme of cost allocation policy.Medicare serves approximately 37 million senior citizens in the United States. Of course, Medicare benefits are limited. With minor exceptions, Medicare fully covers only the first ninety days of hospitalization for an eligible citizen. After such period, a Medicare-eligible citizen may draw upon a non-renewable lifetime reserve, which provides Medicare hospitalization coverage for an additional sixty days.