HMO Rates in 2006 Will Rise at Slower Pace, Data Shows
HMO rates for 2006 will increase at their slowest pace nationally in more than five years, according to preliminary data released Thursday by the human resources-consulting firm Hewitt Associates, the Dow Jones/Wall Street Journal reports. HMOs are seeking from employers average rate increases of 12.4% nationally, down from 13.7% during the same period in 2004. The figure could change after negotiations and terminations, according to Hewitt. The average HMO rate increased by 9% in 2005 after such changes and negotiations (Dow Jones/Wall Street Journal, 6/10). Regionally, HMO rates are expected to increase by 15.8% in the Northeast, 9.4% in the Southeast, 11.7% in the Midwest, 13.5% in the Southwest and 10.9% in the West, according to the data (Munshi, AP/Pittsburgh Post-Gazette, 6/10).
Paul Harris, a health care strategist for Hewitt, attributed Western states' lower rate increases to a higher managed care penetration (Colliver, San Francisco Chronicle, 6/10). "Employers who managed their health-care spending through plan-design adjustments and aggressive negotiations were able to realize HMO rate increases of less than 10% [in 2005] for the first time in five years," Harris said. He added, "In 2006, we expect to see even lower increases, perhaps in the 8% to 9% range, after negotiations are complete" (Dow Jones/Wall Street Journal, 6/10).
Rates have decreased for several reasons, including employers' adjustments to health plan design, "aggressive negotiations" and increased shifting of health care costs to employees, the AP/Post-Gazette reports. In 2005, 25% of companies had plans that charged $20 copayments for doctor visits, up from 16% last year. At the same time, the percentage of companies with plans charging $10 copays decreased from 29% in 2004 to 22% in 2005.
The percentage of companies charging $15 copays for a brand-name prescription drug on the employer's formulary decreased from 20% in 2004 to 15% in 2005, while the percentage of companies with $20 drug copays increased from 33% in 2004 to 35% in 2005 (AP/Pittsburgh Post-Gazette, 6/10). Information from 160 corporations was included in the Hewitt data (San Francisco Chronicle, 6/10).