Insurance Trends for the Medicare Population, 1991-1999

The 1990s saw the emergence of managed care into the Medicare marketplace. In the beginning of the decade nearly all beneficiaries were in the Medicare fee-forservice (FFS) program. In 1991 there were only 1 million Medicare risk health maintenance organization (HMO) members accounting for a little over 3 percent of the Medicare population. By 1999 there were over 6 million Medicare risk HMO members—a nearly 500-percent increase from 1991—comprising 17 percent of the Medicare population. As managed care membership increased, there was a contraction in the number of beneficiaries with traditional individually purchased medigap1 plans. The number of beneficiaries with private medigap plans declined by 2 million, or 20 percent, between 1991 and 1999. These plans, which provided supplemental insurance for 30 percent of Medicare beneficiaries in 1991, covered only 21 percent of beneficiaries in 1999. A large number of beneficiaries who left medigap plans switched to Medicare risk HMOs. Enrollment in employer-sponsored supplemental plans increased slightly in the beginning of the decade, peaking in 1994 at 11.5 million beneficiaries holding these supplemental plans, and has since declined. As a result, employer-sponsored supplemental plans covered 33 percent of the Medicare population in 1999 versus 36 percent in 1991. The number of beneficiaries that were not enrolled in a Medicare risk HMO plan and were also without supplemental insurance declined slightly from 13 percent of the Medicare population in 1991 to 11 percent in 1999.