U.S. Employees Moving From HMOs to PPOs
U.S. employees are "bailing out" of HMOs "in record numbers as their costs have risen faster than high-deductible health insurance plans," and many employees have switched to less restrictive PPOs, the Chicago Tribune reports.
According to the Kaiser Family Foundation and the Health Research and Educational Trust, one in five U.S. covered employees is enrolled in an HMO, compared with nearly one in three in 1996, and the percentage of covered employees enrolled in PPOs increased to 60% in 2006 from 28% in 1996. The shift to PPOs "began as HMOs became increasingly expensive for big employers," in part because HMOs ended use of "capitation" in reimbursements to physicians and because HMOs "attracted sicker patients who needed more care," and employers had to increase premiums as a result, according to the Tribune.
In addition, in the late 1990s, employees "began demanding a broader array of doctors to pick from and more services" from HMOs and "felt there was a stigma to HMOs," the Tribune reports. HMOs also could not continue to exclude more expensive hospitals and physicians from their networks as more facilities began to consolidate.
The annual cost difference between HMOs and PPOs for employers currently is about $150 per employee, compared with $400 in 2001, according to Hewitt Associates.
However, "regional variances ... keep HMOs competitive in certain parts of the country and popular with smaller companies," and HMOs "still boast of lower copayments and out-of-pocket costs," the Tribune reports (Japsen, Chicago Tribune, 11/19).