Los Angeles Times Examines Financial Pressures on Kaiser Permanente

The Los Angeles Times today examines Oakland-based Kaiser Permanente, one of the nation's largest not-for-profit HMOs, which is facing financial challenges that "threate[n] the survival of the managed care model ... it pioneered." The company has had to deal with rising care costs related to its aging members and the exit of many of its younger, healthier members, who have opted for less expensive "bare bones" health plans. Analysts estimate that Kaiser's 8.3 million members may be between 10 and 15 years older on average than members of other health plans. More than 620,000 California seniors are enrolled in Kaiser's Medicare+Choice plan, the highest M+C enrollment of any state insurer. The trends are a "direct assault" on the company's "tradition" of being a "model of managed care," Kaiser officials said. As Kaiser's premiums have "soared" in the past few years, observers question whether the company can continue "its one-shoe-fits-all approach and its competitive edge, and avoid segmenting the membership," the Times reports. To counter shifts in the marketplace, Kaiser will attempt to alleviate some of the financial pressure by offering "more flexible" benefit plans, some with "slightly" higher deductibles and copayments, according to CEO George Halvorson. The company has already added a hospital copayment and set a yearly cap on Medicare drug benefits, the Times reports. However, the Times reports that Halvorson and other Kaiser board members do not wish to go "too far in that direction" (Lee, Los Angeles Times, 9/29).