What is happening?

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@tomsteers wrote:

Can someone help me to understand how this new influx of income for UnitedHealthcare will help us?  TY!

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Insurance premium increases are driven by the amount of claims an insurance company has to pay out.  Especially with Medicare supplements, where UHC has no control or say over what it pays--if Medicare pays then UHC's supplement pays.

A homeowner's insurance company can deny a claim for roof replacement after a weather event, and that's a way for them to limit what they're paying out.  But Medicare supplements can't do that.

(Also, there's a separate forum for discussions about Medicare and insurance.)

It's not just United Healthcare that has increased premiums.  We have Aetna and ours went up $108 a month.  Luckily we live in a state with a birthday rule.  This is my and my husband's birthday month.  We have appled to another company (formerly Cigna), our rate will go down $114.91 a month. 

I believe insurance rates are totally out of control.  Part of it is our litigious society.  This increases malpractice insurance.  Doctors and Hospitals charge more to cover the increased malpratice premiums.  So health insurance companies pay more for our care, which results in higher premiums for us. My husband takes no medications, has no medical problems, and he rarely goes to the doctor.  Yet Aetna is charging him $271.37 a month.

@tomsteers - YOUR state approves these increases to Medigap premiums.  And increases are happening with many other insurers - Do you know how it is done?  It isn’t just a whim or that they want more money - they have to prove their cost in the plans compared to what they are taking in in premiums.  They also have to keep a reserve amount so that all claims can be paid on a timely basis.  A medical loss ratio is the % of claims paid vs premiums collected. 

It is true that these Supplemental plans are not health insurance and thus they do get be a bit higher than health insurance insurers in this %.  For health insurers, they must pay out 85% of every dollar for claims; the remaining 15% is what is reserved for Administrative cost and their profit.  For Medigap plans this % is more like 75% - with the remaining 25% or so for Administration and profit.

You get based on the plan you have chosen, the same thing you have always gotten - That is - Financial protection insurance to prevent a financially catastrophic medical event if you have Original Medicare since OG Medicare does not limit your out of pocket expense at all.   That is what a Medicare Supplemental plan is - Financial protection - A GAP PLAN.

Medigap plans increase in premium cost based on (1) USAGE ( 2) RISK and (3)INFLATION.  I assume you understand USAGE and INFLATION - RISK can vary by area or plan.  The more risk the beneficiary takes upon themselves, the cheaper the premiums for that plan - that is why a High Deductible Plan G has cheaper premiums that a Regular Plan G.  

States play a part in this risk factor because they can pass laws to open up their guaranteed issue rights WITHOUT underwriting - if they do this then people can switch plans or insurers based on the state’s law with out any underwriting, 

AND the state  can give those who are less than 65 and have Medicare because of a disability the right to buy a Medigap plan and some states don’t restrict this to a particular plan - and some states don’t even allow the insurer to change extra for these high health care users.

Federal law does not allow for those less than 65 to get a Medigap plan at all - Federal law only allows for some very specific conditions when a person can switch their Medigap plan without underwriting.  Insurance is a you pay for me and I pay for you type product.  Thus we are all carrying the cost of all users - and in some states the very high users because of their health condition and because these states have eliminated the underwriting qualifications for switching plans.

Premiums in those states where their rules are more lenient in the risk regards tend to be higher because the insurer is taking on more risk - the risk is the health of those who are getting their plan with no underwriting or health assessment.