Hewitt Associates Revise HMO Projected Rate Increases

September 15, 2004 (PLANSPONSOR.com) -The latest Hewitt Associates revisions of health maintenance organization (HMO) rate increases for 2005 show those rate hikes are still projected to decrease from last year's numbers.

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.