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HMO Rates Continue Double-Digit Increases
LINCOLNSHIRE, Ill. -- Preliminary 2005 Health Maintenance Organization rates will increase almost 14%, continuing a trend of double-digit health care cost increases, but the rates are showing signs of moderation, according to new data from Hewitt Associates Health Resource. As U.S. companies begin to negotiate health plan rates for 2005, data shows that initial HMO rate increases are averaging 13.7% compared to 17.5% at the same time last year. After plan changes, negotiations and terminations, the average HMO premium increased by 13% in 2004.Rates in East North Central states, which include Ohio, increased 14.1%. Rates in the Mid-Atlantic states, which include Pennsylvania, increased 12.2%."As we predicted last year, we're starting to see a moderation in health care premium increases, with the possibility of employers who aggressively manage their health care spending seeing increases in the single digits for the first time in five years," said Ken Sperling, East market leader for Hewitt's Health Management Practice. The declining growth in HMO rates reflects the fact that health plans have reached comfortable margins and are willing to price closer to their underlying costs.Despite cost moderation, companies are still facing double-digit increases and, as a result, continue to make plan design changes and share more of the cost with employees. For example, the number of companies offering a $20 office copay nearly doubled from 9% in 2003 to 16% in 2004. The number of organizations with a $15 office copay continues to increase in prevalence from 24% in 2002 to 47% in 2004. At the same time, employers offering $10 office copays continues to drop from 58% in 2002 to 29 % in 2004."The work done by employers in past years is beginning to pay off in 2005," Sperling said. "The trend in health care cost increases has moderated due to stable hospital utilization rates, changes in prescription drug usage brought on by generic and over-the-counter alternatives, the positive impact of increased employee cost sharing on utilization rates, and an increased focus on disease management programs by employers."Employees are also being asked to share more of the cost of prescription drugs, the survey found.Specialty care office visit copays also continue to rise, with 35% of companies using a $15 copay, down from 40% in 2003, and 19% of companies are using a $20 copay, up from 12% in 2003. Some 16% of employers are introducing copays above $20. More than half (55 %) companies currently use a $50 copay for emergency room visits, and 33% use a copay of more than $50, a significant increase from 16% in 2003 and only 7% in 2001."While this moderation in increases is good news for employers and employees, it's important to point out that employers and employees have endured years of double-digit increases, and health care continues to impact both corporate and individual pocketbooks," said Sperling. "Therefore, we expect companies to continue pursuing strategies that allow consumers to better manage their health and make smart choices about the health care services they consume."Hewitt Health Resource, a subsidiary of Hewitt Associates, is a Web-based service that helps companies manage all of their health plan interactions and data needs. Hewitt Associates is a global human resources outsourcing and consulting firm with offices in 38 countries. Visit Hewitt Associates: www.hewitt.com"