Ashmeade
Expert
- 30
Smells like confirmation bias in here.
As I See It: Understanding Medicare Advantage
- Thread starter Northeast Agent
- Start date
- 10,357
Carriers have zero incentive to keep rates competitive in a closed block of business. And they have every financial incentive to encourage you to drop that plan and buy a new plan in an open block.
Imo, its an extremely risky bet if your health would not allow you to pass UW.
Imo, its an extremely risky bet if your health would not allow you to pass UW.
- 6,481
Confirmation bias is a new term to me. I had to look it up.
Specifically why are you tossing it out here? Stated clearly, what are you attempting to say.
- 6,481
Caveat, I am NOT a Medicare Insurance Agent.
Yes. And you have two HDF product comments, from two HDF plan holders; one an agent with decades of experience who could pass underwriting for a product change, the other from a non-agent Medicare Beneficiary who probably could not pass underwriting for a product change at this time.
I can't remember if I knew Somarco had an HDF when I made my initial purchase decision for HDF. I did know he had an HDF when I made my carrier change purchase last year. So with the exception of my knowing about Somarco owning some HDF plan, our specific purchase decisions have been made entirely separate from each other.
Since Medigap plans are standardized, I am defining risk in relation to them to mean the likelihood of high dollar changes in the premium amount. It is my personal belief that "high deductible" Medigap plans F and G taken with selected carriers will provide an opportunity to ameliorate the level of premium risk one would expect to be present in normal plans F and G. I apply that opinion to both open and closed book high deductible plans with selected carriers.
I concur with your statement about zero incentive to keep rates competitive, but there is a twist.
As the block gets older and sicker loss ratio's climb and that is reflected in the renewals. But the HD plans (G & F) are relatively low risk to the carriers due to a higher "touch point" where the carrier has to shell out bux for claims.
Low touch points for F, G and even N absorb the bulk of the claims and ensuing rate increases. Only a handful of carriers offer the HD variety and very few agents write those plans. The risk spread for HD plans is nominal as they make up less than 2% of most carriers total block. Handing out double digit rate increases on plans with $60 premiums does nothing to offset claims for the closed block . . . so plans F, G and (to a lesser extent) N support the block.
Even carriers like UA whose only competitive plan is the HD hand out zero to nominal increases over decades of past experience.
It is impossible to predict future rate increases based on past history, but I don't see a compelling reason for a carrier to try and run off their HD block, at least until pigs fly.
One of my first Medigap clients in 2010 wanted HDF for him and his spouse. He is a friend (and former actuary) I have known for some time and I saw no reason to do anything other than take his order. He not only knew the plan but the carrier he wanted . . . so I took his order.
The initial rate was $46 for each of them (unisex rates) and has since risen to $60 at last check. Both he and his spouse have health issues that preclude them from changing but there is no financial incentive to do so even if they could.
As stated earlier, I would not encourage someone to buy a plan in a soon to be closed block, but there may be justification for moderate risk takes to enroll in the HD variety.
- 6,481
What a great post. Thank you for making it.
(@Ashmeade -- that statement may have been confirmation bias-not sure.
)
