MEDIGAP: Study Says San Diego Seniors Pay Too Much
Some San Diego County seniors are paying "too much" for their "Medigap" policies, health insurance that fills the gap between what Medicare covers and what seniors actually spend on health costs. The San Diego Union-Tribune reports that a Weiss Ratings study found that the most expensive Medigap plan in San Diego County is sold by United Healthcare Insurance Co., the insurance company that was recently awarded an "exclusive contract" with the American Association of Retired Persons. "By choosing one of the nation's most expensive Medigap insurers, I think AARP has done a disservice to its members," said Martin Weiss, president of Weiss Ratings, a Florida-based insurance evaluator. But Tom Otwell, a spokesperson for AARP, which has 2.7 million California members, called the survey "misleading." He said "it glosses over some things and doesn't take into consideration others." Weiss said United does provide "a promise not to raise rates as you get older, unless the company raises rates for everyone." But he said "our data indicate that they may be charging too much for that advantage" (Crabtree, 5/27).
Price Check, Please
The Contra Costa Times reports that the Weiss report studied Medigap premiums for each of 10 benefits packages that a typical 65-year-old man would pay at 97 companies across the nation. The report found that "California tends to be one of the higher-cost states," and that there were wide variations in policy cost throughout the state. According to the report, United's Medigap plans tended to be "the price leader" for five of the 10 standard policies (Appleby, 5/27). According to the Union-Tribune, the reports found that in San Diego County, United's Medigap policies are often twice as much as the least expensive competitor's. For a "no-frills" Medigap A plan, United charges $1,182, while Harvest Life Insurance, the purveyor of the cheapest plan, charges $493. Other inexpensive Medi-gap providers included Blue Shield of California, Blue Cross of California, Pioneer Life Insurance, Union Labor Life Insurance and Celtic Life Insurance.
Don't Judge A Plan By Its Price
But Bob Hussey, vice president of the AARP division at United, "said consumers shouldn't judge a plan by initial price alone." And AARP's Otwell noted that AARP is one of the few Medigap providers that does not age-rate, or charge higher premiums to seniors as they age. "United Healthcare charges one price for all -- it is community-rated instead of age-rated -- so if you are 65 and in good health, or 85 and in poor health, you pay the same amount." Hussey agreed, saying some Medigap plans may charge "less in the year a senior buys" it, but they may "raise premiums steeply as they grow older" -- United doesn't, he said. Hussey also noted that the survey did not take into account United's practice of "underwriting," or offering consumers with any health condition "virtually guaranteed access" to seven out of its 10 plans. "A lot of folks with health conditions wind up being in our program, and that drives up premiums. This survey is just trying to be sensational, they are picking on us because of our relationship with AARP," said Hussey. Supporting AARP's deal with United, Consumers Union's health policy director Gail Shearer said, "One thing AARP does, and they stand almost alone in doing it, is community-rating. It is going to make their policies more expensive, but it seems unfortunate that they get penalized for doing something right." However, she did note that seniors who receive their Medigap from the AARP have seen significant rate hikes in the past few years and said younger seniors might want to look for cheaper policies (5/27).