HMO rates continue double-digit trend but are lower than last year |
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Written by U.S. Insurance News
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Monday, 30 June 2003 |
Preliminary 2004 HMO rates are averaging almost 18 percent, continuing a trend of double-digit health care cost increases, but showing signs rate hikes may be moderating, according to new data. Organizations across the country are beginning to negotiate health plan rates for 2004, and data from the Hewitt Health Resource shows that initial HMO rates are averaging 17.7 percent1 compared to 21 percent at the same time last year.
UNDATED — Preliminary 2004 HMO rates are averaging almost 18 percent, continuing a trend of double-digit health care cost increases, but showing signs rate hikes may be moderating, according to new data from Hewitt Associates, a global HR outsourcing and consulting firm.
Organizations across the country are beginning to negotiate health plan rates for 2004, and data from the Hewitt Health Resource — a Web site that captures HMO rate information for nearly 140 large employers representing more than 1 million employees and annual premiums of nearly $4 billion — shows that initial HMO rates are averaging 17.7 percent1 compared to 21 percent at the same time last year. After plan changes, negotiations and terminations, the average HMO premium increased by 17 percent in 2003.
"The good news is that this may signal the moderation of health care increases over the next few years," said Ken Sperling, East market leader for Hewitt's Health Management Practice. "The decrease in HMO rates 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."
As health care costs continue to escalate, organizations are making plan design changes and sharing more of the cost with employees. For example, the number of companies with a $15 office co-pay increased significantly from 24 percent in 2002 to 43 percent in 2003. At the same time, employers offering $10 office co-pays dropped from 58 percent in 2002 to 39 percent in 2003.
Employees are also being asked to pay more for prescription drugs. Specialty care office visit co-pays continue to rise, with 40 percent of companies using a $15 co-pay, up from 25 percent in 2002 and even a few companies (12 percent) are introducing a $20 co-pay. More than half (55 percent) of organizations use a $50 co-pay for emergency room visits, while 16 percent use a co-pay of more than $50, doubling from just 7 percent in 2001.
"Overall, we anticipate HMO cost increases to end up in the low to mid teens for large organizations," said Sperling. "However, continued increases at these levels remain unaffordable for the majority of employers, so we expect companies to continue making aggressive plan design and employee contribution changes for the future."
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