Medicare Catastrophic Act:

Estimated Effects of Repeal on Medigap Premiums and Medicaid Costs

HRD-90-48FS: Published: Nov 6, 1989. Publicly Released: Nov 6, 1989.

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Pursuant to a congressional request, GAO obtained insurance company and state agency estimates of the potential effects on Medigap premiums and Medicaid expenditures of a repeal of the Medicare Catastrophic Coverage Act.

GAO found that: (1) insurance companies estimated that the repeal would cause an average 15.4-percent monthly premium increase, totaling $250 million in Medigap subscriber costs for 1990; (2) the repeal would increase Medicaid expenditures by an estimated $1 billion, including about $444 million in state funds and about $587 million in federal funds; and (3) state Medicaid personnel attributed the estimated increases to increased deductible and coinsurance payments, skilled nursing facility costs, and numbers of elderly people eligible for Medicaid.

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