HMO Premium Rates Could Rise 18% Next Year, Hewitt Associates Data Find

HMO premiums could increase by as much as 18% in 2004, according to preliminary data released yesterday by benefits consultant Hewitt Associates, the Washington Post reports (Brubaker, Washington Post, 6/24). 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% in 2004, compared to 21% at the same time last year. Employers have asked employees to pay higher copayments for health care services and prescription drugs to help control costs (Hewitt Associates release, 6/23). The data found that the percentage of employers with a $15 copay for physician visits increased from 24% to 43% from 2002 to 2003 and that the percentage with a $15 copay for specialist visits increased from 25% to 40%. Many employers also have asked employees to pay higher copays for prescription drugs, and more employers have begun to participate in three-tiered prescription drug benefit plans, according to the data. In addition, the data found that 55% of the employers have a $50 copay for emergency room visits (Bennett, St. Louis Post-Dispatch, 6/23). However, the data found "a slight easing in premium increases from previous years," Reuters/Chicago Tribune reports (Reuters/Chicago Tribune, 6/24). A Hewitt study conducted at this time last year found that HMO costs would likely increase 21%. 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" (Hewitt release, 6/23). MPR's "Marketplace Morning Report" today reported on the Hewitt data (Brancaccio, "Marketplace Morning Report," MPR, 6/24). The full segment is available in RealPlayer online.