HMO Rates, Medical Costs Set To Increase in 2008
HMO rates for government employees insured by CalPERS will see a 7.4% increase next year, while medical costs are expected to rise 6% to 7%, the Sacramento Business Journal reports.
The estimated $144 million in savings that cut premiums by at least three percentage points was the result of a combination of:
- Higher copayments;
- HMO withdrawal from high-cost counties;
- Movement toward high-performance provider networks; and
- Removal of a popular but local HMO from CalPERS.
Linda Hunter, vice president for ABD Insurance and Financial Services in Sacramento, said, "Renewals have been pretty much all over the board." She added, "But on average, the 10% to 17% range seems to be the norm."
Annual premiums have increased between 8% and 14% since 2000, while inflation and changes in workers' earnings have increased in the 3% to 4% range, the Business Journal reports.
Tom Sher, vice president at the Driver Specialty Group of Alliant Insurance Services, said, "(In the first half of 2007), the trend turned out to be much better than anyone expected."
One of the factors that contributed to the trend was the slowed spending on prescription drugs, which have accounted for 14% of premiums this year.
The accountancy, however, predicts that HMO medical costs will increase 9.9% next year, which will boost HMO rates by an average of 11.8%, the Business Journal reports.
Virgil Williams, health and welfare practice leader of Towers Perrin, said a migration of HMO members into high-deductible preferred provider organization plans is beginning to affect the risk pool left in managed care (Robertson, Sacramento Business Journal, 9/7). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.