Why do Medicare SELECT plans have lower premiums compared to Medicare supplement policies?

Medicare SELECT plans have lower premiums primarily because they deliver healthcare through a network of providers. This means that policyholders are incentivized to receive care from specific doctors, specialists, or hospitals that have agreements with the insurance company. By restricting access to a network of healthcare providers, the insurer can negotiate lower costs, which translates into lower premium rates for enrollees.

This network restriction allows the insurance company to better manage costs, as they can negotiate pricing structures with the providers and reduce overall spending, which is not possible with plans that do not have such limitations. In turn, these cost savings are passed on to consumers in the form of decreased premiums.

The other choices do not accurately represent the core reason for the premium difference. While government-offered plans can exist, Medicare SELECT is specifically a type of private plan. The stipulation regarding out-of-pocket expenses is misleading, as SELECT plans still entail some costs, and they do not necessarily cover a wider range of medical services compared to standard Medicare Supplement policies.