Health Insurance and the Elderly

The effectiveness of proposed changes to the Medicare program depends on consumers' responses to different market incentives, which vary according to the coverage the elderly possess to supplement their Medicare coverage. This Data Watch explores the extent of supplemental insurance among the elderly, based on a new data set from the Medicare Current Beneficiary Survey. Only 11 percent of Medicare beneficiaries have only Medicare as their source of coverage; the rest of the elderly population is covered by either private coverage (employer-sponsored retiree coverage or individually purchased coverage) or Medicaid. An increase in Medicare cost sharing would likely affect one-third of elderly beneficiaries, which calls into question the effectiveness of this approach to Medicare program reform.