- The Washington Times - Tuesday, June 13, 2006

NEW YORK (AP) — Rate increases for health maintenance organizations are set to be less than expectations next year for the fourth consecutive year, but still create challenges for employers, according to a report released yesterday.

Preliminary figures show that HMO rates will jump approximately 11.7 percent next year, down from initial estimates of 12.4 percent in 2006 and 13.7 percent in 2005, said consulting firm Hewitt Associates.

The report was based on a Hewitt Web site that captures initial rates HMOs are offering employers, and the increase may be different after changes in plans, prices and providers. The final average rate increase was 10 percent this year, and Hewitt believes the jump will be around 7 percent or 8 percent next year.

Paul Harris, senior health care strategist for Hewitt, said the decelerating trend in rate increases resulted from better discounts from providers and expanded provider networks. Yet, he said, the increases “were still a major cost problem for employers.”

Mr. Harris said he expects employers to continue shifting some of the cost increases to employees. The number of employers requiring a $5 copayment for generic drugs fell to 23 percent this year, down from 46 percent in 2002. In contrast, no companies required a $15 copayment for generic drugs in 2002, but by this year 9 percent of employers did.

Meanwhile, the number of employers who require more than a $50 copayment for an emergency room visit increased to 52 percent this year, up from 33 percent in 2005 and 16 percent in 2003. The proportion of employers requiring only a $50 copayment fell to 32 percent this year, from 55 percent in 2005.

The 2007 outlook was based on information from nearly 160 large companies employing more than 1 million people collectively.

Only about 25 percent of employees are in HMOs, but Hewitt said the rate trends in those plans act as a bellwether for all types. Other studies have also recently found increases in health-plan rates are continuing but at a slower pace than in previous years.

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