Do determinants of Medicare supplemental coverage choice vary by income?

Using data from the Community Tracking Study Household Survey (1998-99), we estimate the relationship between Medigap premiums and senior Medicare beneficiaries' supplemental coverage decisions. All seniors are more likely to be enrolled in an HMO in markets with higher Medigap prices. Lower income seniors are particularly sensitive to Medigap premiums and are more likely to have no supplemental coverage when faced with higher Medigap premiums. As Medicare supplemental options evolve in response to the 2003 Medicare Modernization Act, it is important to consider that lower income beneficiaries may respond to price changes and other factors differently than their higher income counterparts. (January 2006)