HMO Costs Trend Higher Than PPO, POS Options

September 5, 2001 ( -Health Maintenance Organization (HMO) costs are expected to rise even faster this year than other health-care plan types and at double-digit rates, a survey released Wednesday shows.

In its sixth National Health Care Trend Survey, Buck Consultants found that 2001 HMO costs are expected to rise by 11.5%, compared with a 9.2% hike the year before.

The Buck survey also found that rate of anticipated increases in 2001 costs compared to 2000 cost hikes were

  • 14% at preferred provider organizations, up from the 12% increase in last year’s survey
  • 16.2% in traditional indemnity plans, versus 14.2% last year
  • 12.3% higher in point-of-service plans, compared with 10.4% previously

Prescription drug cards are expected to rise 20.0%, roughly the same as last year’s 19.9% increase.

In response to the faster growth rate, Buck researchers said employers are considering new cost sharing-approaches, such as up to five levels of co-payments, in an effort to control drug spending and better educate their employees.

Health insurers use trend factors by coverage — medical, prescription drugs, dental and vision care — to calculate their premium rates. Large self-funded employers use trend factors to budget their future health care costs.

In general, trend factors provide for increases resulting from inflation, utilization of services, technology, changes in the mix of services, and mandated benefits.

Buck surveyed 90 insurers and administrators.