In California, Prudential’s basic plan rose 37% from $552 in 95’ to $774 in 96’. Their most popular plan, with more benefits increased premiums in California by 39% from $1,161 in 95’ to $1,614 in 96’. Elsewhere increases ranged from 40% in Hawaii to 26% in South Carolina.

Premiums for Blue Cross-Blue Shield increased less than Prudential’s but increases for Medigap commonly ranged from 20 to 40 percent. It is reported that other companies such as Mutual of Omaha, Bankers Life, and Pioneer Life start out with lower rates than Prudential at age 65, but increase rates substantially at ages 75 and 80.

With the average Social Security benefit for a single person totaling $724, the new premium increases of 20, 30, and 40 percent in one year, will put a substantial squeeze on their budget and many will opt out of the Medigap market. It is claimed that one reason for the premium increases is that the government does not cap hospital outpatient charges for Medicare beneficiaries.