Some elderly pay less in Md.

Study finds state's Medigap cost lowest except for Utah

Health insurance

June 13, 2000|By M. William Salganik | M. William Salganik,SUN STAFF

Marylanders covered by Medicare pay less than seniors in most other states for Medigap insurance policies, according to a study released yesterday by Weiss Ratings Inc., a Florida company that monitors the solvency of insurers.

On average, Maryland seniors pay $594 a year for Medigap "Plan A" insurance, a no-frills policy - lower than consumers in every state but Utah and about half the rate in Florida or New York, according to the Weiss study.

Medigap policies, already popular, may prove increasingly important as Medicare HMOs withdraw from the market, saying they are losing money. The Medicare HMOs have been a popular way of getting benefits not provided by basic Medicare, particularly prescription drugs, preventive care and first-dollar coverage for hospitalization. Those same benefits can be purchased in Medigap policies.

Melissa Gannon, a vice president of Weiss Ratings, said, "People who can afford Medigap have mostly stayed with Medigap," rather than going to the lower-cost but more restrictive HMOs. While HMO pullouts might produce "a little bit of an increase" in Medigap use, Gannon said, she expected the shift to be small.

But Jeffery W. Valentine, director of corporate communications for CareFirst BlueCross BlueShield, said his company gained almost 3,000 Medigap subscribers when its HMO left rural Maryland counties, leaving about 14,000 seniors looking for other coverage.

Gannon attributed regional price differences in Medigap policies to differences in medical costs - Utah, for example, with the lowest Medigap rates, has lower medical costs than high-premium states such as Florida and New York - and to "company strategy. Where they think they can do well, their prices are lower."

Dennis Carroll, Maryland deputy insurance commissioner, attributed relatively low costs here to a competitive market.

"There are more than 30 carriers actively marketing policies, and competition tends to keep rates in check, " he said.

Also, Carroll said, insurance regulators "scrupulously scrutinize" filings for premium increases, and have knocked down proposed boosts that were not justified by claims data.

Valentine said his company sought Medigap premium increases in Maryland of 6 percent to 8 percent in the most recent rate cycle, but regulators approved increases of less than 2 percent. By contrast, it won approval of increases of more than 8 percent in the District of Columbia.

Under federal rules, Medigap policies are offered in 10 standard packages of benefits. Plan A, the most basic, covers hospital and medical co-payments a patient would have to pay under standard Medicare coverage. The policy with the richest benefits, Plan J, includes coverage for prescription drugs, preventive care, home nursing and stays in skilled-nursing facilities

In addition to the second-lowest premiums on Plan A, Maryland has the 14th-best average cost ($1,167 per year) for a midlevel Plan F policy and the 11th-best ($2,613 per year) for a high-benefits Plan J policy.

Weiss, which collected 38,000 quotes from 113 insurers, found considerable variation within, as well as among, states. For example, Plan A premiums in Maryland ranged from $468 a year to $1,045; Plan F from $1,040 to $1,728; and Plan J from $2,157 to $3,600. In all cases, the higher-cost policies do not require medical examinations.

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