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Premium analysis: HMOs to see biggest increase in 5 years

Christian Schappel
by Christian Schappel
January 21, 2011
1 minute read
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Companies that offer healthcare coverage through an HMO aren’t going to be happy about this. HMO premium increases this year will be the highest since 2006, according to the latest research. 
Aon Hewitt, an HR consulting and outsourcing firm, has captured and analyzed HMO premium info for 160 large employers — and the results aren’t good for plan sponsors.
The analysis found that the average HMO rate increase for 2011 will be 9.8%. That’s the highest increase since 2006, which came in at 10%.
And that’s after rates increased 9.4% in 2010 and 9% in 2009.
According to Aon Hewitt, the reasons for the big hike in 2011 include:

  • The increasing popularity of high-deductible health plans and PPO plans, which have taken lower-risk individuals out of HMO plans — thus raising the risk pool and prices, and
  • The fact that insurers have estimated that the cost impact of certain healthcare reform provisions — like covering children up to age 26, the elimination of lifetime/annual limits and covering preventive care services — will be greater on HMOs than other plans.

As a result of such drastic premium increases, companies are starting to drop their HMO plans. According to data from Aon Hewitt, only 47% of employers offered HMO plans in 2010. That’s significantly fewer than the 58% that offered HMO plans in 2007.
Is your company dealing with a similar spike in premium increases this year? If so, what’s it doing to cope? Let us know in the Comments Box below.

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