The Pricing of Medi Gap Coverage

This paper presents an abbreviated history of the events leading up to Medicare and the impact of Medicare since its inception upon the health care system and health care costs. Because of the social pressures brought about by ever increasing health care costs, especially to the elderly, Medi Gap policies, their benefits and pricing, have come under close scrutiny of the regulator. The main body of the text deals with those benefits which not only present particular pricing considerations, but which also are closely evaluated by the regulator. In many instances, the historic data collected and produced by the insurer to develop utilization and pricing trends must be supported by data from external sources. Hopefully, this presentation provides the reader with not only some new insights into the techniques of pricing programs of this type, but also of the social pressures which influence the regulator in assuring the availability of insurance at reasonable rates. In some states, this has led to subsidization of the Medi Gap policies by those people under age 65. One can see the pressure expanding to use insurance as a means to address the problem of economic and social inequities not only in the area of personal property and casualty coverage, but also in the area of health insurance.