HMO premiums expected to increase yet again

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HMO premiums expected to increase yet again

By Appleby, USA TODAY 6-9-2005

Employers received good news and bad Thursday about

next year's expected HMO premium increases: They're

going up but not as much as in the past few years.

As negotiations begin for next year's rates, quotes

tracked by benefit firm Hewitt Associates show HMOs

asking for increases of about 12.4%. The survey also

says that once negotiations are completed — and

employers make benefit changes — HMO increases for

next year are likely to fall into the 8%-to-9% range.

The proposed increase is the lowest in five years.

" The good news is the rate of increase is down, " says

, senior health strategist for Hewitt. " The

bad news is it is still a double-digit increase. "

For five years, double-digit increases have hit most

employers, prompting many to raise the amount workers

pay for coverage.

The average annual premium for an HMO is $3,450 for a

single employee and $9,504 for a family plan, a

separate survey by the Kaiser Family Foundation shows.

The Hewitt survey, although imperfect because it

tracks only large employers who offer HMOs, is watched

closely by investors and employers because it is the

first attempt to forecast next year's rates.

The results were greeted warmly by Wall Street, which

had expected slightly lower increases. Investors like

higher premium increases because it means HMOs may

make better profits. That's particularly true because

underlying medical inflation has slowed in recent

quarters to about 8%.

" We anticipate that managed care stocks will respond

favorably to the first run of the Hewitt database, "

wrote Stanley analyst Arnold in a

report.

But employers have a different view.

" Trends are coming down a little bit but are still

generally breaking double digits, which is enough to

put far too much pressure on workers' wages and

competitiveness, " says Lee, president of the

Pacific Business Group on Health, a coalition of

employers.

The proposed rate increases vary regionally, with the

largest increases seen in the Northeast and the lowest

in the Midwest. Because the survey looks only at HMOs,

it may not reflect what will happen with insurance

policies called preferred provider organizations, or

PPOs.

Such plans generally allow enrollees a wider choice of

doctors and hospitals but come with higher annual

deductibles. PPOs are the most popular type of managed

care insurance plan.

One way employers will attempt to lower the premiums

is to shift more costs to workers through higher

co-payments for doctor office visits, hospital visits

and drugs. Workers may also have more taken out of

their paychecks to cover their share of the premiums.

.. This year, for example, employers bargained down

initial HMO premium increases from Hewitt's

projections of 13.7% to 9%. Part of that was by

shifting costs to employees.

The Hewitt survey says 25% of companies had health

plans that charge workers $20 co-payments for doctor

visits, up from 16% in 2004. The percentage of

companies with $10 office visit co-pays declined to

22% from 29% in 2004.

Dr. DeSiena, D.C.

Washington Street Chiropractic Center, L.L.C.

771 Washington Street

Eugene, OR 97401

(541) 686-BACK (2225)

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