In
the News
HMO
Rate Increases Continue to Decline for Fourth Consecutive
Year,
According
to Hewitt Associates; U.S. Employers Remain Focused on Managing
Costs
LINCOLNSHIRE, Ill., Jun 13, 2006 (BUSINESS WIRE) -- Preliminary
information from Hewitt Associates, a global human resources
services company, shows that 2007 HMO rates will increase
approximately 11.7 percent -- representing the fourth consecutive
year of declining rate increases.
As U.S. companies begin to negotiate HMO plan rates for 2007,
data from Hewitt Health Resource(TM) (HHR) -- a Web site that
captures HMO rate information for nearly 160 large companies
representing more than 1 million employees and annual premiums
of nearly $4 billion -- shows that initial 2007 HMO rate increases
are averaging 11.7 percent(1) compared with 12.4 percent in
2006 and 13.7 percent for 2005. After plan changes, negotiations
and terminations, the final average HMO rate increased by
10 percent in 2006 (see attached chart).
"Although there has been a steady decline in the level
of HMO rate increases over the past several years, double-digit
increases are still very difficult for employers to absorb,"
said Paul Harris, senior health care strategist, Hewitt Associates.
"The good news is that there do not appear to be market
pressures that might cause rates to begin increasing again.
We are continuing to work closely with employers in developing
benefit programs that make the most of their current resources,
while still providing their employees with high-quality health
care coverage."
Regional
While the U.S. is showing a lower rate of increase overall,
some areas of the country, namely the Southeast and West,
are experiencing slightly higher rate increases. Preliminary
analysis shows 11 percent increases for the Southeast in 2007
compared with 9.4 percent at this time last year, and 13.7
percent for the West compared with 10.9 percent last year.
Managing
Costs
Although increases are moderating, 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 $20 office copays
continues to increase from 16 percent in 2004 and 25 percent
in 2005 to 29 percent in 2006, while the number of employers
offering $10 copays dropped to 17 percent in 2006 compared
with 22 percent in 2005 and 29 percent in 2004.
Employees are also being asked to share more of the cost of
prescription drugs (see chart below).
(1) Preliminary HMO increases are before plan changes, negotiations
and terminations.
----------------------------------------------------------------------
Prescription Drug 2002 2003 2004 2005 2006
----------------------------------------------------------------------
Generic
----------------------------------------------------------------------
$5 copay 46% 29% 28% 24% 23%
----------------------------------------------------------------------
$10 copay 40% 52% 50% 52% 51%
----------------------------------------------------------------------
$15 copay greater
than 1% 5% 6% 9%
----------------------------------------------------------------------
Brand Formulary
----------------------------------------------------------------------
$10 copay 28% 15% 12% 10% 7%
----------------------------------------------------------------------
$15 copay 30% 26% 20% 15% 14%
----------------------------------------------------------------------
$20 copay 26% 32% 33% 35% 31%
----------------------------------------------------------------------
$30 copay greater
than 1% 6% 7% 13%
----------------------------------------------------------------------
Brand Non-Formulary
----------------------------------------------------------------------
$10 copay 9% 7% 5% 4% 2%
----------------------------------------------------------------------
$25 copay 21% 8% 5% 5% 6%
----------------------------------------------------------------------
$30 copay 22% 19% 14% 11% 10%
----------------------------------------------------------------------
greater than $30 copay 24% 24% 38% 38% 40%
----------------------------------------------------------------------
Employers
are also trying to control costs by increasing copays for
specialty care and emergency room visits. For example, the
number of employers who require more than a $50 copay for
emergency room visits has increased to 52 percent in 2006,
a significant increase from 33 percent in 2005, 16 percent
in 2003 and 7 percent in 2001, while the number requiring
only a $50 copay for emergency room visits has decreased to
32 percent in 2006, compared with 55 percent in 2005.
|
