Question

Do a Google search for any term involving medigap. Share some information you find. Do you think consumers are savvy regarding medigap insurance or is just another confusing part to the Medicare puzzle which many do not understand?

Answer 1

Medigap pays some part or all of the expenses Medicare does not cover, depending upon the level of coverage one selects. The costs of what Medicare does not cover can be considerable, specially if one requires extensive treatment / long-run hospitalization. Private insurance firms provide Medigap policies, so one should shop around. The selection is made simpler by a letter arrangement. F, G, & N are the popular preferences.

Why do consumers have to purchase more Insurance?

Original Medicare coverage has gaps in it. It pays most of your costs but not all if you fall seriously ill / get injured. Even regular services come with deductibles & co-payments. This is where Medigap insurance comes in.

Despite a concerted strategic effort to ensure a well-operating market, the insurance market doesn’t

seem to lead to effectual outcomes for individuals. I consider manifold explanations for

the Medigap market structure. Firstly, adverse selection could lead to greater premiums

/ an under providing of insurance. Both the scale for potential selection & its empirical significance are restricted in this setting. Then again, in addition

to asymmetric info, a low elasticity of demand coupled with brand preferences may

cause welfare losses for individuals. Insurance plans are complicated financial commodities,

& its extremely difficult for average citizens, leave alone a potentially weak & less

technology-saavy cluster of elderly citizens, to comprehend / research all of the contractual

aspects .Individuals are willing to pay more for insurance from a ‘trustworthy name,’ potentially

pushing up premiums as they trade-off brand preferences for outlay.