Insurer hits millions of seniors with drug cost hike

December 31, 2006

The more than two million senior citizens nationwide who signed up last year for Humana Inc.'s least expensive Medicare prescription drug plan face average premium increases of 60 percent -- and in seven states, increases of 466 percent -- starting tomorrow . The higher prices will affect about 50,000 seniors in Massachusetts, where premiums are going up by 130 percent, from $7.32 to $16.90 a month.
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"You have to state the obvious," said David Shove , a stock analyst with Prudential Equity Group in New York. "You sell something cheaply and get a lot of customers, and then you raise the price to improve the profitability."

Shove said the start-up of the Medicare prescription drug benefit "was a once-in-a-lifetime opportunity" for Humana to attract new customers.

Steve Findlay , a healthcare analyst with Consumers Union, the publisher of Consumer Reports, called Humana's price increases a "bait and switch" tactic.

"That's not an acceptable inflationary increase in prices," he said. "That's sucker them in and you just start raising the prices."