Medigap and Politics Don’t Mix


Harry Reid speaking at the State Children Heal...

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“We are hearing disturbing stories from beneficiaries across the country about excessive premium increases for Medigap supplemental insurance policies,”

Sens. Harry Reid (D-Nev.), Max Baucus (D-Mont) and John Kerry (D-Mass.)

The quote above is taken from a letter from those senators to the Secretary of Health and Human Services as quoted in The Hill’s article, “Dems Leaders Urge HHS to Crack Down on Medigap Rate Hikes” Now that the rest of the “evil” private health insurance companies have been thoroughly chastised by the liberal politicians, it appears that a new target has been chosen for the vile of politicians.

As an insurance agent I am dismayed over the recent round of increases to Medigap plans.   In my opinion, people who reach age 65 have already paid too much to the American health care system.

Traditional Medicare has 4 parts, A, B, C and D.  Parts A & B are the closest thing to what most of us know as Major Medical health insurance.  Part A is typically provided with no cost to the insured.  Typically, it will only cover costs associated with a hospital stay. 

Part B is optional and charges a premium of around $ 100 a month, depending on when one enrolls.  It provides insurance coverage for medical expenses incurred outside of the hospital.  That includes routine doctor office visits and treatments.

Medicare has a payment schedule they use to reimburse medical providers.  That schedule is often 20% less than what the providers normal fee is.  Medicare then only reimburses 80% of the costs of that lower reimbursement fee. 

It would be nice if a supplement for Medicare was not even necessary.  Unfortunately, as long as Medicare refuses to pay a medical provider’s full fee, something has to give.  Either the government needs to mandate physician’s work for less than their due or allow another option for people to pay for the full amount of their medical bills.  Medigap allows people to trade their premium money for a promise that the portion of their medical bills that the federal government does not pay will be paid.

Medigap is not mandated, like the mandates that Reid, Baucus and Kerry forced on all citizens under age 65.  If someone on Medicare wants it, they will pay the premium.  If they do not want the promises Medigap makes, they are not required to pay the premium. Medigap is an option, just like Medicare B. 

It is true that one company, United of Omaha, has raised rates on their Medigap plans.  Contrary to the recent Senatorial letter to Kathleen Sebelius, here in Texas their rate increase was closer than 10% than the 40% exaggeration from the “distinguished gentlemen.”

It is also true that if people do not accept the proposed rate increase, they still have the freedom not to pay the increased premium or to shop with one of the many other Medigap carriers who have not increased their rates.

I know that less than a year ago, United of Omaha had the lowest premiums available, in many cases, of the companies that I represent.  They have elected to raise their rates.  Even with their rate increase, they are still priced competitively with other private insurance carriers.

In America, medicine is a business.  Doctors must pay their own way through school, staff and equip their office at their own expense while monitoring the health of people in their community.  In my opinion, until the government is willing to take all of their expenses away from them, they have no right to gripe about the expenses caused by the system.

In other countries, medical providers are salaried employees of the government.  One of the reasons socialized medicine is working, to an extent, in those countries, is because physicians do not have the freedom to set their own fees.

To me, the letter from Reid, Baucus and Kerry to Sebelius is just another example of politicians playing politics with other people’s health and money.

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