HMO PREMIUMS: New Study Confirms Rates Up 7.8% This Year
It's official: after four years of flat HMO rates, average per member per month monthly premiums are up 7.8% this year, from $128.28 in 1997 to $138.30 in 1998, according to a new study from actuarial and consulting firm Milliman & Robertson. And on a per-employee basis, the 1998 increase was closer to 10% -- from $151.01 to $164.17. Steve Cigich, the principal who compiled the report, said, "Three factors contributed to this year's rise in rates: poor profitability, the inability of HMOs to obtain further unit cost reductions and the inability of HMOs to further encourage providers and health care systems to provide care more efficiently. ... If this trend continues, we cannot rule out further premium increases." M&R reports that HMO profits were down this year due to declining hospital admissions, longer lengths of stay, increasing Medicare and Medicaid hospital utilization and a 7% jump in pharmaceutical prescriptions written for HMO enrollees. New England has the highest premiums in the country, followed by the mid-Atlantic region. The Pacific states had the lowest rates in the country. Overall, Cigich noted, "HMO rates are still only up 1% annually since 1994 even allowing for this year's spike" (Milliman & Robertson release, 11/19).
Around The Nation
- San Diego: San Diego premiums undercut the national average by 22% -- $30.76 -- helped by a hospital utilization rate of 209 days per 1,000 members. (The national average is 239 days per 1,000 and California's is 189 per 1,000.)
- Los Angeles: Los Angeles' average HMO premiums were 23% -- $32.07 -- below the national average. Hospital utilization was 190 days per 1,000 members.
- New York City: The Big Apple's average premiums topped out at $175.70, 27% over the national average. In the state, the New York City book premium number was $29.63 more than New York as a whole.
- Boston: Beantown's rates were 19% -- $26.41 -- above the national average. The Boston book premium number was $5.65 more than Massachusetts as a whole (Milliman & Robertson releases, 11/19).
- Connecticut: The Hartford Courant reports that Connecticut's premiums are the highest in the country. While rates only "jumped 7.4% -- about the same as the national average" -- premiums averaged $184.42 (Levick, 11/19).
- Dallas-Ft. Worth: "Dallas HMOs charge higher health care premiums than their peers in seven of the 10 largest U.S. cities," the Dallas Morning News reports. At 2% above the national average -- $141.23 per month -- Dallas' rates are among the highest in the area (Ornstein, 11/19). Nearby Ft. Worth residents paid $135.76, 4% less, than their Dallas counterparts, and also less than those in Houston, who paid 5% above the national average (Lunday, Ft. Worth Star-Telegram, 11/19).