August 2003

HMO premiums likely to increase 18 percent

HMO premiums could increase by as much as 18 percent in 2004, according to preliminary data released by benefits consultant Hewitt Associates.

According to data from the Hewitt Health Resource Web site, which tracks HMO premium rate information for 140 large employers, early negotiations with HMOs indicate that premium rates could increase 17.7 percent in 2004, compared to 21 percent at the same time last year.

Employers have asked employees to pay higher co-payments for health care services and prescription drugs to help control costs.

The data found that the percentage of employers with a $15 co-pay for physician visits increased from 24 percent to 43 percent from 2002 to 2003, and that the percentage with a $15 co-pay for specialist visits increased from 25 percent to 40 percent. More employers have begun to participate in three-tiered prescription drug benefit plans, according to the data. In addition, the data found that 55 percent of the employers have a $50 co-pay for emergency room visits. However, the data found “a slight easing in premium increases from previous years,” (Reuters/Chicago Tribune, 6/24). A Hewitt study conducted at this time last year found that HMO costs would likely increase 21 percent.

Ken Sperling, East market leader for the Hewitt Health Management Practice, said, “The [slowing] in HMO [rate increases] reflects the fact that health plans have made an adjustment to make up for conservative pricing last year, hospital costs are slowing, and while drug utilization is still high, greater use of over-the-counter and generic alternatives have impacted drug prices.”

Industry News from:
Chiropractic News from: