Seniors to See Rise in Medical Insurance Costs

WASHINGTON — The dragon of medical inflation is breathing fire again, with millions of senior citizens facing hefty increases for their Medi-gap supplemental insurance this year.

United HealthCare Corp., the biggest single player in the market, is raising premium prices about 9%. In its Southern California region, which includes Los Angeles and Orange counties, the price hikes will range from 4.8% to 19%, depending on which of the 10 standard Medi-gap plans a customer has chosen.

The price increases are drastically higher than the overall rate of inflation faced by U.S. consumers, which is running at a negligible 1.5%. But Medi-gap, the private insurance meant to pay for what Medicare doesn’t cover, is a highly sensitive barometer of actual health care costs. And the fast-moving insurance prices reflect the reality of caring for the nation’s masses of elderly: They are healthy and long-lived, but it takes tremendous amounts of money to keep them that way.

The resurgence of medical inflation comes at a difficult political time, when a special bipartisan Medicare commission is grappling with ideas to assure the financial solvency of the massive program, which covers 40 million people 65 and older and the disabled of all ages. The soaring health costs mean that any solutions the commission fashions could be overwhelmed simply by the reality of demographics.

The fastest-growing group of Americans is people age 80 and above. Healthier than their counterparts in the rest of the world, they have access to new, less-intrusive surgical techniques that make it possible to replace a hip or a knee at a more advanced age than ever before.

For baby boomers and their aging parents, greater longevity is a fact of life. And the old will keep getting older. By the census of 2010, predicted Bill Beach, an economist at the conservative Heritage Foundation think tank, the fastest-growing group of Americans will be those ages 90 and above. “No one has anticipated what medical science would be able to do.”

But the costs of longevity are also growing. Now an average of $15,000 a year is spent for the health care of those over 80. As they age and fall prey to a series of ailments and chronic conditions, many will need additional financial help, especially with prescription drugs, which are not covered by Medicare.

Millions of people already buy supplemental Medi-gap coverage because Medicare won’t give them complete coverage for hospital and doctor bills. The supplemental insurance costs about $120 a month for the most basic coverage to nearly $250 a month for the most comprehensive.

The “high costs of Medi-gap coverage are straining the limited budgets of growing numbers of seniors,” according to an article by economists Henry Aaron and Robert D. Reischauer of the Brookings Institution, a nonpartisan think tank in Washington.

And the price tag could escalate.

“Costs have been relatively flat over the last few years, but they are starting to rise again,” warned Bob Hussey, vice president of retirement and senior services for United HealthCare, which is the exclusive Medi-gap supplier for the American Assn. of Retired Persons. The average age of buyers of his firm’s Medi-gap coverage is 77, up from 75 a few years ago.

Unlike the majority of Americans with insurance through work--who are usually limited in their selection of doctors and hospitals--most Medicare enrollees are still living in a fee-for-service world. They select any doctor who participates in the Medicare system.

Although health maintenance organization participation is growing rapidly, notably where drug coverage is offered, an overwhelming 85% of Medicare beneficiaries remain in the traditional fee-for-service system.

Therefore, a significant Medi-gap price hike is a warning sign about the difficulties of paying for medical care in a steadily aging society.

“More is done for patients at all stages in the health care delivery system of 1999, compared with 1965 [when Medicare was created], and that is what is driving costs,” said Karen Ignagni, president of the American Assn. of Health Plans, the HMO trade group.

The soaring demand for Viagra, the drug that enables impotent men to have erections, has set off an intense debate over what society can afford to do for the aging population. Individual consumers, medical experts, economists and ethicists have to figure out how to “draw the line between medical necessity and lifestyles,” Ignagni said.

Viagra may be generating the headlines and spawning jokes on the Internet, but the debates over medical cost and efficacy go on every day in doctors’ offices and hospitals and around kitchen tables.

A person can see with cataracts, but not well enough to drive at night unless he has the cataracts removed. A dedicated tennis player can walk readily but can’t go back on the court until she has a hip replacement. Are the surgeries medical choices or lifestyle decisions?

Dr. Henry Simmons is head of the National Coalition for Health Care, which includes businesses, health care providers and corporate consumers. He argued that the “whole medical system is headed in absolutely the wrong direction.” Citing increased drug advertising aimed directly at consumers, Simmons said that “newspapers and television are telling people, ‘Buy this product, we can really help you,’ when the drug might be of very marginal benefit.”

But patients want, and get, more treatments as they age. And that is precisely the time of life when most people “will have some level of chronic disease,” said Dr. Rick Smith, regional elder-care coordinator for Kaiser Permanente in Northern California. High blood pressure, arthritis and coronary artery disease are among the conditions that become more common with age. The incidence of cancer also rises sharply.

“If you were healthy until age 85 and you begin to get sick, you are much more prone to want aggressive things done even though they may not prolong your life,” said Smith, an internist and geriatrician.

“Sometimes I’m not sure what the best thing is,” he acknowledged. “When a patient is beyond age 85, the efficacy of many treatments isn’t proven.”

Even the best doctors, the most advanced equipment and the hospitals of best repute sometimes make no difference--except for costing more.

For example, elderly patients suffering from pneumonia “who are treated in urban teaching hospitals with specialists, high-technology procedures and expensive resources fare no better than those treated at rural hospitals that do not have specialists or sophisticated procedures,” according to a study by the federal Agency for Health Care Policy and Research, or AHCPR.

The likelihood that these patients will recover has no relation to the amount of money spent, the number of procedures performed on them or the expertise of the doctors called in for the case.

Ironically, one of the handful of scientifically proven treatments to increase longevity and health among the elderly is very low-tech. It has nothing to do with Medicare, Medi-gap or any insurance program or surgery. It is simple: marriage. The federal researchers at the AHCPR found that elderly people who are married live longer because they are more likely to eat breakfast, wear a seat belt, get exercise and have their blood pressure checked regularly. And they are less likely to smoke.