THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, October 25, 1996 TAG: 9610250562
SECTION: FRONT PAGE: A3 EDITION: FINAL
SOURCE: FROM WIRE REPORTS
DATELINE: WASHINGTON LENGTH: 51 lines
The cost of supplemental health insurance premiums for senior citizens rose more than 30 percent last year in some states - and by 40 percent for certain Prudential policyholders in Virginia and North Carolina, says a study released Thursday.
``The sharp increases in Medigap (supplemental Medicare) insurance premiums are a threatening prospect for older Americans who are simply trying to make ends meet,'' said Ron Pollack, executive director of Families USA, which sponsored the study. ``Many of our nation's elderly are going to be squeezed out of the Medigap market.''
The rising cost is particularly difficult for senior citizens who rely on Social Security benefits, which rose only 2.6 percent last year, he said.
Many people buy the insurance to pay for services not provided by Medicare, the federal health program for the elderly. The study examined the rates of the two largest Medigap providers, Prudential and Blue Cross/Blue Shield, which serve 50 percent of the market.
Prudential's Medigap program provides coverage for 3.2 million members of the American Association of Retired Persons, said Jerry Carey, a Prudential spokesman.
Premiums for Prudential's most basic Medigap coverage for a 65-year-old increased about 40 percent in Virginia and North Carolina - from $375 to $525 in Virginia and from $354 to $492 in North Carolina. Premiums for Blue Cross/Blue Shield's most basic policy went up from $396 to $420 in Virginia and from $372 to $435 in North Carolina - 6 and 17 percent, respectively.
Carey said Prudential's increase this year - which he attributed to more claims and higher Medicare deductibles - was the highest ever. From 1994 to 1995, 42 out of 50 states had no rate increase. Over the past five years, the average increase hovered around 8 percent.
But Geri Dallek, the study's author, attributed the increases to several factors. She said costs to providers skyrocketed because Medicare does not limit reimbursements for outpatient services, allowing hospitals to charge astronomical fees.
Dallek also said that as healthy older people switch to health maintenance organizations, those who keep traditional coverage tend to have more costly illnesses covered by the Medigap policies.
``The problem with (HMOs) is that a one-size-fits all formula may not be the right choice for seniors with chronic and disabling conditions,'' Dallek said.
Pollack said the study's findings are alarming because this past session, congressional leaders considered raising Medicare premiums as they debated how to save the 31-year-old program. by CNB