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- Oct 13, 2010
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There are two factors at work. In the set of people who are allowed into a plan without underwriting due to an over age 65 guaranteed issue, there will be formerly Medicare Advantage people and formerly traditional Medicare people. The other factor is that the default replacement is plan G. But it is also likely agreed that if everyone has the same level of utilization (no group is sicker than the other), then it doesn't matter.Nobody has explained why those people who qualify to enroll under Guarantee Issue would be more expensive to insure than those who are already in a Plan G pool. The circumstances which result in someone having Guarantee Issue eligibility have nothing to do with their individual health. In the absence of any explanation or data, I think that Guarantee Issue is a red herring as far as Plan G rate increases are concerned.
I guess because I've heard so much about people on Medicare Advantage plans that can't pass underwriting and being starved of important medical services in all sorts of ways, and they now consider their decision to go with the cheaper (at the time) Medicare Advantage plan a mistake, those people would be jumping into traditional Medicare for the obvious reasons. Whereas the healthy person coming from an MA plan might go cheap again because they're not sick don't yet know the problems of getting treated under a marginal MA plan.
The result is that as each decision is made for a guaranteed issue person, the sicker MA people will opt for traditional Medicare. This is the same thing as guaranteed issue at age 65; if you know you'll be using a lot of services, you're advised to go with traditional Medicare.
I'm not sure that it's a big factor. In fact I'm pretty sure it's not a big factor in pricing when you have large pools of people. But if you believe sicker people formerly on MA plans are more likely to switch to traditional Medicare than healthy people, then it's at least a factor of some magnitude.