Stupid Carrier Tricks

[somarco]

Several years ago we started a series of blogposts modeled after David Letterman's "stupid pet tricks". We called it "Stupid Carrier Tricks".

Seemed appropriate enough.

Most of the time we named the carrier along with their missteps. Sometimes we didn't. It has been a while since I posted anything in the "stupid" series but I might just unleash another one very soon.

Recently two of my "go to" Medigap carriers have delivered out-of-the-ordinary (higher than usual) rate increases. One decided to do it mid-year. The other is rolling them out monthly on the policyholder anniversary.

A little over a week ago I was notified of 53 mid-year increases ranging from 10% to over 15%. Past increases have been less than 6% so these are unusual. Some coming 9 months after the last increase for a few of my clients. Others are 12 month out or longer.

If all were healthy I could justify moving 51 of the 53 to other carriers. The other 2 would save less than $7 to change.

What really annoys me is the stupidity of this kind of move by the carrier. Their new rates means their block is vulnerable. Many healthy people will move while sick people stay behind. This creates more instability which will trigger even higher increases in the future.

You would think they would have better sense, but apparently not. It's almost as if they came out of a fog and noticed the block was souring.

It really doesn't matter why. All I know is that I have over 80 renewals to deal with in the next few weeks. At least it didn't happen during AEP.

 

[Justin Bilyj]

What's the lesson? Expect rate increases no matter what. Don't paint a company to have more stable rate increases because the past doesn't dictate future performance (you can try, but you can't be a fortune teller).

The best you can do is play the shuffle game, and be a resource for them when it comes to Medicare. Tell them healthcare costs still double the rate of inflation (shown below), and to put any savings aside to combat future rate increases in both Part B premiums and Medigap premiums.

 

[somarco]

After 44 years in the health insurance industry I probably have a good idea about trends, rate increases, how to manage a block, etc. And no, I do not promise anything about future rates.

What did surprise me is to see a carrier that appears to be well managed, with a number of years in the Medicare business, pull a stunt that could torpedo their block in Georgia and any other states if they try the same thing.

One thing I have learned from observing the Medicare market is, there are carriers that do play fast and hard for a couple of years then roll out a new name and start all over again. Those snakes have shed their skin more than once and no doubt will do it again.

Health care costs are only one market segment vs the heavily manipulated consumer indices. Health care is also complex, highly regulated and the cost is controlled mostly by the federal govt. Due to the unique nature of health care, plus the consumer typically pays less than 20% of the cost of care, trending projections impossible more than a year into the future.

On the insurance side, health care claims are short tail lines of business where profits or losses are usually known in 18 months or less. As the govt seeks more influence the claim costs become more volatile. Every time the govt moves in one direction, providers and carriers move in the opposite direction to offset govt influence.