For Plans With Drug Coverage, Medigap Premiums Rose 37% Over Past Three Years, New Analysis Shows

The average cost of supplemental insurance policies purchased by Medicare beneficiaries to help cover prescription drug expenses has risen 37% in the last three years, according to a new study from Weiss Ratings. USA Today reports that the Florida-based insurance rating firm analyzed the 10 standard Medigap policies sold by insurers nationally. These policies are used by seniors to pay for some deductibles and co-payments not paid by Medicare. These policies can also offer additional benefits, such as prescription drug coverage. Of the seven plans that do not provide a drug benefit; the premiums increased an average of 15.5% from 1998 to 2000. The premiums of the three plans with a drug benefit, however, rose an average of 37.2% in the same period. The study attributed the steep increase to the rising use and cost of prescription drugs. Weiss' chair Martin Weiss said that one problem facing seniors shopping for Medigap is that comparative prices between insurers are "not always available," creating an "inefficient market." The study is the third this month to detail the rise in prescription drug costs: a HCFA report found that drug costs would rise from a current 9.4% of personal health spending to 16% by 2001, while a Congressional Budget Office study released last week estimated that seniors will spend $1.5 trillion on prescription drugs in the next decade, 30% more than projected a year ago. Gail Shearer of Consumers Union said that federal lawmakers need to consider these rising costs when evaluating a Medicare prescription drug benefit. "It's imperative that Congress address the rising price issue hand-in-hand with designing coverage for drugs. If they don't, this could just be a blank check to the pharmaceutical industry," she said (Appleby, USA Today, 3/26).