HMO Coverage Rate Hikes Seen Moderating in 2006

June 9, 2005 ( - In another sign that health coverage cost increases are apparently slowing, a new Hewitt Associates survey found that HMO rates will increase approximately 12.4% nationally in 2006 - the smallest increase in more than five years.

A Hewitt Associates news release said that data from Hewitt Health Resource – a Web site that captures HMO rate information for roughly 160 large companies representing more than 1 million employees and annual premiums of nearly $4 billion – shows that initial HMO rate increases are averaging 12.4% compared with 13.7% a year earlier.

The East and Southwest, are experiencing slightly higher rate increases, according to Hewitt data. Preliminary analysis shows 15.8% hikes for the East in 2006 compared with 14.6% at this time last year, and 13.5% for the Southwest compared with 13.4% last year.

Companies also continue to adjust their plan designs and share more of the cost with employees. For example, the number of companies offering $20 office copays continues to increase from 16% in 2004 to 25% in 2005, while the percentage of employers offering $10 office copays has dropped from 29% in 2004 to 22% in 2005. Employees are also being asked to share more of the cost of prescription drugs in the form of higher copays.

Another way employers are controlling costs is by increasing copays for specialty care and emergency room visits. For example, the number of employers who require a copay of more than $50 for emergency room visits has increased by 26% since 2001.