Four companies increased their average premiums by 50 percent or more:

• American Community Mutual Insurance Company (53.5 percent); 
• Healthy Alliance Life (96.1 percent)(1); 
• Kitsap Physicians Service (61.3 percent); and 
• LifeWise A Premera Health Plan (58.8 percent). 

Other companies with large increases in average premiums include:

• Universal Fidelity Life (49.4 percent), 
• American Exchange Life (48.2 percent), 
• Regence Blueshield (46.5 percent), and 
• Blue Cross & Blue Shield of Colorado & Nevada (44.6 percent).

In contrast, three companies decreased their average premiums: Mountain State Blue Cross & Blue Shield (-0.3 percent); United Teacher Associates Insurance (-1.1 percent); and Blue Cross & Blue Shield Of Illlinois (-2.9 percent). Two others had only slight increases: Lincoln Mutual Life & Casualty (3.5 percent) and Unicare Life & Health (1.2 percent). `There are several possible causes for price changes,` commented Martin D.

Weiss, Ph.D., chairman of Weiss Ratings, Inc. `Some companies may have initially underpriced their policies to gain market share and are now playing catch up. Others may be under pressure to produce bigger profits for shareholders. And at still others, the magnitude of the price rise may have been affected by changes in their pricing model.`

Overall, the average rate increase implemented by the 144 providers of Medigap policies was 20.2 percent. However, this average belies the great range of price increases not only between companies but also on individual plans and in specific areas of the country.

For example, in Alabama, average Medigap premiums for Plan A (typically the least expensive of the 10 standard Medigap plans) surged 84 percent with Guarantee Trust Life but fell 9.3 percent with Monumental Life. On Plan C, the range was even greater, climbing 85.6 percent with Guarantee Trust and dropping 27.4 percent with Continental General.

In New Mexico, Universal Fidelity Life hiked its average premiums on Plan J (typically the most expensive plan) by 111.3 percent, from $1,530 in 1998 to $3,233 in 2000, while Equitable Life and Casualty raised its average rates on Plan J by only 10 percent.

Some states, such as New York, had a more consistent pattern of price increases. The largest increase in the state for Plan A was 33 percent (by Finger Lakes Blue Cross & Blue Shield), and the largest increase for Plan J was only 10.5 percent (by AUSA Life).

`But regardless of the specific cause,` added Dr. Weiss, `the price changes are both erratic and unpredictable, with many seniors subjected to rate hikes that have a negative impact on their financial well-being. We believe their best protection is to shop around for the least expensive policies offered by financially secure insurers.`

The Weiss study was the outcome of a contract for data collection (1998 to 2000) and analysis awarded by the Health Care Financing Administration (HCFA) to Weiss Ratings in partnership with The Lewin Group, based in Falls Church, Virginia. To calculate average premiums for each company, Weiss found the company`s average premium rate for each Medigap plan in each state, using strictly those for which data was available in both years.

Senior citizens shopping for the least expensive and safest Medigap policies can obtain a Health Insurance Report for Seniors ($49) available from Weiss Ratings at 800/289-9222. The report, based on each consumer`s individual circumstances, provides customized comparisons of the actual premium rates offered in his or her county of residence for each of the ten Medigap plans, along with the Weiss Safety Rating for each carrier.

Consumers needing more information on the financial safety of a specific company can purchase a rating and summary analysis for as little as $7.95 through the Weiss Ratings web site at www.WeissRatings.com. Ratings are also available by phone (800/289-9222) starting at $15.

Source/Resource: HealthWire Press Release; WeissRatings.com, April 17, 2001.