Ninety percent of the elderly who subscribe to Blue Cross and Blue Shield's "medigap" coverage face increases of less than 3 percent now that Maryland Insurance Commissioner John A. Donaho has approved them.
The increases, announced by the Insurance Division today, will go into effect Tuesday. They will affect 105,000 Marylanders who have Blue Cross Medicare supplemental policies, which pay various expenses not covered by Medicare.
Garry V. Raim, director of marketing for Blue Cross' individual market division, said today the insurer is "concerned" about the decision. The much higher rates originally requested by the company "reflected the level of benefits that we were going to provide to our customers," Raim said.
But there are no plans to appeal the decision, he said. "We're going to monitor the programs and make sure they remain sound," he said.
Blue Cross had asked that the rates be boosted an average of 13 percent, with increases for the four "medigap" programs ranging from 10.3 to 20.9 percent. The proposed increases would have brought $11 million more to Blue Cross each year.
Blue Cross, the state's largest health insurer, has four types of medigap policies: basic, standard, choice and premium. About 90 percent of the medigap customers are in the standard and choice programs. Rates in the programs vary with a person's age.
Donaho granted a 2.4 increase for the standard plan and a 2.9 percent increase in the choice program. Blue Cross had sought a 10.5 percent increase for standard and 11.4 percent for choice. Donaho granted larger increases for the other two programs, for an average increase of 5 percent.
Donaho said today he granted the smaller increases because the evidence presented by Blue Cross did not support the higher increases. The evidence was primarily about increases in Medicare deductibles and drug costs.
"We cut them back to the point that they were justified," Donaho said.
Under Donaho's ruling, monthly premiums for a 65-year-old person in the standard plan will rise from $28.88 to $29.57. For a 70-year-old person, the rate in the same plan will increase from $41.55 to $42.54.
In the choice plan, the monthly rate will increase from $53.42 to $54.96 for a person 65 years old. For a 70-year-old person, the monthly premium will move from $75.73 to $77.92.
Donaho gave Blue Cross the full 21 percent increase requested for the basic program, the insurer's lowest-cost medigap plan. In a news release, Donaho cited the "very poor" rate of loss in this stripped-down program as the reason for the increase.
The insurance commissioner was also more generous with the premium program, granting a 11.9 percent increase. Blue Cross had requested a 21 percent boost in the premium rates.
The reason given for the larger increase in the premium plan was that it includes a prescription program and the cost of drugs has increased more rapidly than that of other medical care, according to the news release.
Blue Cross had proposed the increases in response to the
federal government's decision to boost the deductibles for Medicare coverage on Jan. 1.
Medicare deductibles will go from $592 to $628 for hospital coverage and from $75 to $100 for medical coverage.
Other reasons cited by Blue Cross for the increases include escalating health-care costs and the greater use of Medicare-covered services.