Joan E. Ancell, a disabled former school teacher, is intent on keeping her high-priced medical policy that fills in the gaps of her Medicare coverage. She is so intent on keeping the policy that she sold her condominium and moved into an apartment when the cost of the premium jumped 11.9 percent last year.
But now she is facing another possible increase, of 19.4 percent, and may have to cut her living standard further. "How far down can I move," she said.
Ancell made her comments yesterday during an Insurance Division hearing on a request by Blue Cross and Blue Shield to raise its Medicare Supplement and Over 65 Plans by 12.1 to 19.4 percent. These plans are commonly known as medigap policies. Blue Cross officials say they need the increases because of an impending boost in a Medicare deductible and generally rising medical and hospital expenses.
Blue Cross has four medigap programs: basic, standard, choice and premium. The basic coverage has the lowest cost and fewest benefits while the premium plan costs the most and is the most comprehensive. Added together, the rate request is 16.7 percent for all four programs.
But Ancell, 50, and another Blue Cross customer testified that the increases threaten their already fragile finances. "A $35 or $36 increase scares the living daylights out of me," Ancell said. The Blue Cross proposal would increase the monthly premium from $182.96 to $218.45.
She is part of Blue Cross' Premium plan, the most expensive of four programs and the only one that provides prescription coverage. The Premium plan, which has been closed to new members, has fewer than 8,000 customers.
Ancell suggested that one way the insurer could hold down costs is to require that the prescription portion cover only generic drugs, rather than brand names.
For William R. Kahl, 80, of Baltimore County, the increase in the Premium plan would nearly wipe out the 3.7 percent increase he will be getting in his Social Security payment. "I would suggest that the increase not be greater than the cost of living," Kahl said.
But Blue Cross said it needed the increase for its financial health. Blue Cross expects to lose $2 million to $3 million on the four programs this year, according to Linda Benedict, vice president of the individual market division of Blue Cross.
She also said the rate increase is less than the 19 to 20 percent increases being requested by insurers in other states.
Benedict said the overall rate request would have only been 8 percent had the Insurance Division granted its 13 percent request last year. Instead, the division gave Blue Cross a 5 percent average increase.
Insurance Commissioner John A. Donaho, who will make the decision, said the conflict was between protecting the solvency of the insurer versus increasing the cost of insurance to the elderly, many of whom have fixed incomes. "We have to be concerned with both," he said. The commission has no time frame for a decision.