Medigap Insurance Premiums Rise Sharply

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WASHINGTON, D.C.: At a time when Congress is considering possible cutbacks in Medicare coverage, the cost of Medigap policies, which cover health care costs that Medicare does not, has increased some 20 to 40 percent, according to the advocacy group Families USA. The organization, which promotes liberal policies on health care issues, analyzed the premium increases between 1995 and 1996 for Medigap in 35 states for Prudential and Blue Cross/Blue Shield. The two insurance giants cover more than 50 percent of the $12 billion Medigap market. The group attributed much of the increase in premiums to hospital outpatient charges, which are not capped for Medicare beneficiaries -- and therefore represent an opportunity for hospitals to pad costs. Said Geraldine Dallek, the group's health policy director: "As Medicare squeezed part of the balloon in terms of inpatient costs, the other part of the balloon has expanded." The bad news for seniors: the rise in Medigap premiums far outpaced Medicare inflation or Social Security Cost of Living adjustments in many states. "The sharp increase in Medigap insurance premiums are a threatening prospect for many Americans," said Families USA executive director Ron Pollack. "When premiums increase 20, 30 and 40 percent in one year, may of our nation's elderly are going to be squeezed out of the Medigap market." --Lamia Abu-Haidar