The Medigap Crisis We Helped Create
By Alexandra Szczepaniak, Chief Operating Officer | Solidarity Health Network
Medigap Plan G premiums are up anywhere from 12% to 26% depending on your carrier and state. And our industry helped build this problem.
Five years ago, a Medigap rate increase over 10% was considered unusual. Now it’s rare to see one below 10%. That’s not a blip. That’s a structural shift — and it’s worth asking honestly how we got here.
Part of the answer is market instability at the MA level bleeding into the supplemental market. When 2.6 million people lose Medicare Advantage coverage because their insurer exited their market, those forced transitions ripple outward. Medigap pools absorb enrollees with unknown or complex health histories, carriers reprice to compensate, and everyone in the supplemental market pays more.
But here’s the piece that isn’t being talked about enough — and it should be.
The HRA Conversion Problem
For years, consulting firms have been recommending that employers convert retiree group coverage to individual HRA arrangements. The pitch is clean: offload the liability, give retirees a stipend, let them shop the individual market. Problem solved.
Except it isn’t.
When you move retirees from group coverage to individual exchanges, you remove them from the collective bargaining power that group arrangements provide. The group can negotiate. The group can absorb risk across a broader population. The individual cannot. And that individual stipend? It doesn’t rise with premiums. So every year that Medigap rates climb 15% or 20%, the retiree absorbs more of the gap — until the benefit that was promised to them as part of their employment is functionally worthless.
“We are watching the long-term consequences of short-term cost shifting play out in real time.”
Short-Term Cost Shifting Has Long-Term Consequences
The employers who converted to individual HRA arrangements solved for their balance sheet. They did not solve for their retirees. And the consulting firms that recommended it without modeling the 10-year premium trajectory did their clients a disservice.
Group protection exists for a reason. Bargaining power exists for a reason. When we walk away from those tools in pursuit of administrative simplicity, we don’t eliminate the cost — we just move it onto the people who can least afford to absorb it.
What Needs to Change
If you’re advising groups with retiree populations right now, this is the conversation that needs to be on the table. Not just what solves for this renewal — but what protects these people in year five and year ten.
At SHN, we’ve spent over 30 years specializing in retiree healthcare and the group solutions that protect it — for union members, public retirees, and Taft-Hartley funds. Retiree healthcare isn’t a line item for us. It’s the work we were built to do. We understand what’s at stake when these promises are made — and what it takes to keep them. That’s why right now, this conversation matters more than ever.
If your organization is heading into bargaining — or if you’re an employer looking to protect your retiree population the right way — reach out directly. We’d welcome the conversation.
Alexandra Szczepaniak, COO — aszap@shninc.org
#RetireeHealthcare #MedicareAdvantage #Medigap #EmployeeBenefits #GroupBenefits #HRA #HealthcarePolicy #SHN
Solidarity Health Network, Inc. | www.shninc.org | Cleveland, Ohio