HMO rates to jump 12% in 2010, Hewitt study projects

HMO rates to jump 12% in 2010, Hewitt study projects
By Bruce Japsen
Copyright © 2009, Chicago Tribuner
1:00 PM CDT, July 15, 2009
http://www.chicagotribune.com/business/chi-hmo-costs-jul15,0,6342069.story


At a time general inflation has virtually disappeared, health-care costs for consumers aren't likely to slow next year with HMO rates projected to jump nearly 12 percent in 2010 for self-insured employers, a new study indicates.

Though the study by Hewitt Associates only looked at HMOs, it provides a snapshot at where companies are as they negotiate rates for next year with insurers. Consumers won't find out exact rates until this fall's open enrollment period, but they generally pay more than employers do.

Though HMOs are not the dominant form of health benefit coverage, they can indicate medical cost trends. HMOs are the most restrictive form of health insurance in that they limit doctor and hospital choices to those in their networks.

Most Americans with health-care coverage tend to choose less restrictive health plans such as preferred provider organizations that allow subscribers to go outside of PPO networks for doctors and hospitals at a greater cost.

Hewitt, a Lincolnshire-based benefits and outsourcing consulting firm, cautioned that rate increases projected now could change. But such changes often come at the expense of employees.

"While HMO rates continue to outpace inflation and underlying health care trends, employers have been increasingly successful in reducing these costs by 3 to 4 percentage points over the past few years through plan design changes, cost shifting and negotiating aggressively with health plans," said Maureen Fay, a principal and co-leader of Hewitt's HMO rate analysis project. "Given these challenging economic conditions, we expect to see employers continuing to implement similar--if not more aggressive--strategies for 2010."

Hewitt's study comes from a database of 160 employers that are self-insured, covering more than 1 million people. Most large employers offer such self-funded plans that are generally administered by private insurance companies to manage the pool of company paid-premiums.

bjapsen@tribune.com