Does AARP's branding agreement with UHC for Medigap plans preclude UHC from closing books?

[mem2002]

So many insurance companies offering Medigap (Medicare Supplement) insurance plans routinely close their plans to new enrollees (known as "closed books" or "closed blocks of business") after about 5 years of business.

The reason for this is as claims come in, they have to start raising rates to cover costs; once their rates are no longer competitive, they "close" the plan and open another under a different name under a shell company.  Their initial rates may be really cheap compared to other plans, to sucker newcomers into their plan.  But as they raise rates, and then close the plan to new enrollees, the rates really skyrocket since there are no new healthy people signing up.  Those who cannot pass underwriting are stuck in that plan along with its jaw-dropping rates.

So my question is, does AARP's branding agreement with UHC for Medigap plans preclude UHC from closing books and playing the plan shell game?  It seems if AARP is looking out for their members' interests, they would forbid UHC from doing these switcheroos in their contract.

Yes, their rates would not be the cheapest (and indeed, in my market, they are $16 higher/month than the lowest premium currently).  But at least a policyholder would know they were not going to be trapped in a closed pool (and subsequent death spiral of rate hikes) if AARP's contract precluded such a practice.  Of course, rates will always increase with all plans, due to medical inflation and advancing age; but closed pool rates far exceed these.

Really, the whole idea of insurance is to indemnify policyholders against loss by spreading risk among as large and as diversified pool as possible for the benefit of all.  Baiting enrollees with cheap rates and then trapping them in closed pools runs counter to how insurance is supposed to work.

[GailL1]

The same response that I posted to you in the other thread - just wanted to keep it within the subject threads.

After thinking about this “closed book” subject again - it dawned on me that the discontinuance of certain Medigap plans by CMS - like Plan F - has the same effect as a closed book plan.  

That is to say that premiums will rise just because no new / younger / healthier beneficiaries are allowed into the discontinued plan to balance out the older and possibly sicker - thus as the discontinued plan marches on in time, those still in it will be affected by increasing premiums because the plan is now only filled with older and possibly sicker beneficiaries.

The closing of specific Medigap plans by CMS or closed book on a plan by the insurer really has the same effect on premiums.  The dollar bleed has to be stopped and that what both of these entities are thinking about when they close a book of business (by insurer) or a plan (by CMS).

[GailL1]

I have always heard that there are some bad players and some good player -

Bad ones that do close book on their plans regularly - CIGNA, Mutual of Omaha and Aetna and under any number of  their subsidiaries.

Good ones include - BCBS, UHC and some others.

Why would AARP UHC Medigap plans even have to do this when most, maybe all, of their plans are community rated?  

Now all insurers could do this under some adverse conditions in a specific area like if they are going to stop doing business in a specific area because of market conditions.  It is either that or premiums would rise anyway because of the market conditions in a specific area.  If it gets so bad that they pull out of an area, then I believe that opens up a guaranteed issue reason to get another plan without underwriting.  

There is another way too - kind of a work around and timing is crucial and that is to use the ONE TIME ONLY Medicare Advantage Trial Period and then go back to Medigap and if the policy you had before is in c;loses book, you get to pick another one,  Like I said, the timing is crucial and it is a ONE TIME ONLY - I’ve heard this from several agents but I don’t know of anybody that has tried it but the Medicare law does seem to support it based on its wording.

I might be wrong but I don’t recall UHC having same type subsidiaries - it seems all their subsidiaries are in differing aspects of the healthcare field.