HMO Rates Still Skyrocketing

October 4, 2002 ( - The cost of employer-sponsored health care and prescription drug coverage will continue to rocket to the moon, according to a new survey.

The survey by Miliman USA found the Health Maintenance Organization are planning to jack up renewal rates by about 17% in 2003.

HMOs also reported that 2002 premium rates were 16% to 22% higher than 2001 premium rates. Rising health care expenses continue to drive up premiums.

This is the fifth year in a row that premiums have increased after four years of little or no increase, according to the survey.

According to Miliman researchers, rising health care expenses are also the primary reason behind the movement to Defined Contribution/Consumer Driven (DCCD) health plans that is expected to take hold over the next few years.

Raising Employee Health Care Share

HMO executives told pollsters they expect employers to increase workers’ share of health care costs, while stepping up efforts to educate employees about making wise health care decisions.

Respondents also expect HMOs to work more closely with physicians to provide efficient and effective care.

As far as prescription drug costs are concerned, the survey showed drug increases have slowed, but remain in double digits.

The prescription drug cost increase in 2002 was 12.5%. This is the first time since the Milliman survey began tracking prescription drug increases that the rate of increase was below the average total premium increase, according to the survey.

Hospital inpatient costs also rose at a rate lower than the overall average premium increase. The hospital inpatient cost increase in 2002 averaged 7.1%.