Initial HMO rate increases are at 13.7% for the year, up 0.1% from July, but still down significantly from last year’s 17.5%, according to data aggregated by Hewitt Associates from Hewitt Health Resource, a Web site (See Hewitt Revises HMO Increase Figure for 2005 ).
The Southwest is expected to see the biggest projected increase at 16.9%. Following that are the East (16.1%), Midwest (13.7%), Southeast (12.8%), and West (12.2%).
Plan sponsors can be encouraged that cost-reduction strategies may be working. In 2004, the Lincolnshire, Illinois-based Hewitt found many companies made plan design changes, reducing their average rate increases to 11.2%. This strategy is continuing for 2005, with about one-third of employers requesting alternate plan designs that carry an average rate increase of 8.7% over existing 2004 rates.