The HR consulting firm Hewitt Associates reports that projected 2010 HMO premium rates will increase by approximately 11.8%. A number that remains consistent with last year’s projected rate increases, but is down from 13.2% in 2008.
Final average HMO rates for 2009 grew by 9.0% after plan changes, negotiations and terminations, according to Hewitt’s analysts. Nearly 56.6% of employers provided HMOs in 2009, compared to 59.1% in 2008.
“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,” says 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,” she adds.
Strategies, no doubt, aimed at consolidating vendors or moving to self-insurance. In many cases, employers are eliminating less efficient HMOs in favor of more efficient network models, Hewitt’s experts found.
When employers consolidate plans, they have more control over their claims data, allowing them to better analyze the results. This means employers can create appropriate health care strategies to address underlying health risks, conditions and utilization patterns specific to their population.
For example, employers that have moved their prescription drug benefits for HMO enrollees to one centralized plan are able to use drug claims data to identify and stratify health risks, report Hewitt’s analysts.
Still, employers continue to shift a greater portion of health care costs to employees. In 2009, more employers are moving from a copay to a coinsurance model by shifting from a $15 office copay and $250 hospital copay to a $200 plan deductible, followed by 90% coinsurance for all services. Between 2007 and 2009, out-of-pocket costs for large employer HMO offerings increased by 11 to 12% per year, according to Hewitt’s research.