When Medicare was first announced in the law some years back, insurance agents created Medicare Supplements, or Medigap plans, to help people insure against the various cost-sharing for which they would be responsible under the new federal health insurance program for seniors. These plans, as originally designed, help consumers cover the expense of Medicare Part A & B deductibles and co-insurance. For many years, these were the only type of supplemental plans available. As part of the Balanced Budget Act of 1997, though, the government created a whole new type of program called Medicare Advantage (MA). Any of the plans are not Supplements, though, and they operate very differently so it’s important that you understand the difference before making a decision on which kind of plan would be right for you.
Why did Congress create AARP Medicare Advantage plans? Well, they came about as the result of several factors. https://www.medicareadvantageplans2019.org/aarp-medicare-advantage-plans-for-2019/
First, there were was the increasing costs for Medicare itself and for Medigap plans. Over the years, the Medicare deductibles and co-insurance increased with inflation, as does the cost of most things in America. Since many Medigap plans cover these costs for insured members, the monthly premiums for those same plans also continued to increase.
Furthermore, at the same time, many Americans on social security to be their entire retirement income, and sometimes they didn’t realize until it was too late that this income was not nearly enough to meet all their living expenses. The outcome was that a fair amount of people over age 65 could not afford the cost of Part B and the premium for a Medigap plan. This problem was compounded by the fact that Medicare did not cover for retail prescription drugs, so citizens had to pay for these entirely out of their own pockets. The turmoil from Medicare receivers was clear: many had to make choices between healthcare costs and groceries or rent.
When some beneficiaries decided to forego Medicare supplements and just take their chances, an epidemic of tragedies soon followed. Someone healthy at age 65 might have decided not to buy insurance. However, they later created a health condition requiring, for example, an open heart surgery. The congress feared these individuals that would be denied care because they couldn’t pay.