Hewitt Predicts Double-Digit HMO Premium Increases

Premium rates for health maintenance organization will increase by an average of 11.8 percent nationally in 2009, preliminary data from Hewitt Associates shows.

The projection is a decrease from the 13.2 percent increase projected for 2008 and a slight increase over the 11.7 percent estimate for 2007. The rate projection continues to outpace inflation and underlying medical cost increases, said consultants at Lincolnshire, Illinois.-based Hewitt.

However, employers likely will be able to reduce these overall increases to an average of 9.4 percent through aggressive negotiations with HMOs, by switching from fully insured to self-insured arrangements, and by emphasizing wellness and prevention among plan members, Hewitt consultants said.

“While initial 2009 HMO premium rate increases remain high, we expect to see that employers will once again be able to reduce overall increases by at least two or three percentage points,” said Jeff Smith, a senior consultant and co-leader of Hewitt’s HMO rate analysis project, in a statement.

Hewitt’s HMO analysis project also discovered that employers in certain regions of the country are likely to experience greater increases.

For example, HMO premium rates paid by employers in the Southeast region, which includes such states as Florida, Mississippi and Georgia, will grow by as much as 15.4 percent, compared with just 7.3 percent in the Southwestern states of New Mexico, Texas and Oklahoma, which will experience the lowest regional rate increase.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.