New Report Forecasts 12% Hike in HMO Rates for California, the West
HMO premiums likely will increase by 12% in California and other western states, above the 11.8% jump in HMO premiums anticipated nationwide, according to a report by Hewitt Associates, the Sacramento Bee reports. Hewitt Associates is a human resources consulting firm.
The projection is based on information from 160 large companies that buy coverage for about one million people.
Jeff Smith, the consultant who leads the HMO rate study, said the average premium increase likely will fall as more companies finalize their HMO contracts.
Smith said that CalPERS' success in negotiating HMO premium increases far below national and regional averages could drive up rates for others buying HMO coverage.
CalPERS' average increase for HMO premiums is 6.57% for next year.
Smith said, "For those (less-expensive) plans to be offered to CalPERS, they have to be subsidized by the private market," adding, "It's basically cost-shifting."
However, Kaiser Permanente, which offers HMO plans to CalPERS, said it does not shift costs to other buyers to compensate for CalPERS' lower premium increases (Ortiz, Sacramento Bee, 7/17).