Western Pennsylvania's seniors could see HMO bills soar

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Western Pennsylvania 's seniors could see HMO bills soar

More than 67,000 in Allegheny County face double-digit increases from region's largest insurer

By Pamela Gaynor, Post-Gazette

October 02, 2003

Retirees and disabled people who belong to the region's largest Medicare HMO can expect double-digit premium increases in 2004, the seventh consecutive annual jump for many of them since Highmark Inc. began marketing the Security Blue plans nearly nine years ago.

Highmark said it plans to raise premiums for the HMO's members in Allegheny and 10 surrounding counties by 31 percent to 55 percent, depending on what version of the health plan they choose. Premiums in counties outside the 11-county area, which are higher now, increased by smaller amounts.

More than 188,000 Western Pennsylvanians , including 67,483 in Allegheny County are enrolled in Security Blue.

When Medicare HMOs first were offered here in the early 1990s, many seniors viewed them as a godsend because the premiums for private insurance to supplement traditional Medicare coverage -- the so-called Medigap plans -- had become prohibitively expensive.

The latest HMO premium increases come on top of sharply rising drug costs that have walloped many retirees and left Congressional conferees struggling to agree on legislation to expand Medicare to provide prescription coverage and possibly push more people to obtain Medicare benefits through private contractors, such as Medicare HMOs.

Highmark's proposed premium increases, which still require approval from the federal Centers for Medicare and Medicaid Services, would put the cost of the most basic version of Security Blue, which doesn't include prescription coverage, at $56 a month, up from $36 this year and just $12 last year. The most popular version of the health plan and the less expensive of two that carry prescription drug benefits, would rise to $129 a month from $97. The most expensive version would increase to $138 monthly from $105.

Unlike some previous years, however, Highmark said, Security Blue members won't see any changes next year in co-payments for doctor's visits or prescription coverage. Benefits also are expected to remain the same, but Security Blue does plan to begin charging members 15 percent of the cost of any durable medical equipment they need, such as wheelchairs or walkers.

Highmark offered the Medicare HMO industry's standard explanation for the premium increases: Medical costs are rising faster than the reimbursements Medicare provides to insurers to administer the plans.

Helene Weinraub, Highmark's senior vice president for senior products, said increases in Security Blue's federal reimbursements have been averaging 2 percent annually while the HMO's medical costs are increasing between 11 percent and 12 percent. Next year's costs are projected to increase 9 percent.

Weinraub said Security Blue is profitable, but declined to disclose how much it earned in 2002 or how much it would earn this year. She said costs and benefit changes Highmark has imposed on Security Blue members over the years reflected what the insurer found necessary to have "a viable product."

Although the exodus has slowed of late, Medicare HMOs across the nation continue to abandon markets where reimbursements, which differ in every county, are lowest. Although reimbursements in Allegheny County have been among the nation's richest, a few Medicare HMO operators have withdrawn from the region since the private health plans arrived in the early 1990s. One of those leaving was Aetna, Inc., the company that introduced them to the region.

The two local Medicare HMO operators that still compete with Highmark, UPMC Health Plan and Health America , have not yet disclosed the premium changes they plan for next year.

But Medicare analysts said the other insurers almost certainly will raise rates too.

"This is the trend," said Deane Beebe , spokeswoman for the Medicare Rights Center, a national consumer advocacy organization funded largely by foundations. "Year after year, with the HMOs that didn't drop out [of offering plans in various regions] we have seen premiums going up and benefits decreasing."

Beebe argued that industry complaints about inadequate government reimbursements were specious. While the per-member payments to HMOs have lagged the government's average costs for traditional Medicare beneficiaries, she said, HMOs attract healthier people than the traditional program, making its costs higher.

Highmark's Weinraub said studies pointing to younger, healthier demographics for Medicare HMOs were outdated and that the early enrollees to plans such as Security Blue have since aged, closing the gap with traditional Medicare. Highmark first offered Security Blue in 1995 and only a tiny fraction of its members -- fewer than 3 percent annually -- have elected to stop coverage.

Whatever is pushing the premiums higher, the increases could force a lot of seniors out of Medicare HMOs just as the Bush administration and Republican Congressional leaders are pushing for greater involvement of private insurers in Medicare.

"We hear every day on our hot line from people who cannot afford their health care," said Beebe. "They can't afford Medigap [supplements], they can't afford the premiums for the HMOs and they can't afford their prescription drugs."