NU Online News Service, Aug. 6, 10:52 a.m. – Weiss Ratings Inc., Palm Beach Gardens, Fla., an independent insurance rating service, says a study of 492 health maintenance organizations shows the U.S. HMO industry turned a profit in 2000.
The profit is the first the HMO industry has reported since 1996, Weiss says.
The 492 HMOs earned a total of $990 million in 2000, compared with a cumulative loss of $1.8 billion from 1997 to 1999.
After the HMO industry posted $1.8 billion in profits in 1995, aggregate HMO profits plummeted due to rising health care costs and growing consumer demand for more flexible plans, Weiss says.
Starting in 1999, large HMOs began restoring profitability by boosting rates and shedding unprofitable lines, Weiss says.
At the same time, more than 100 HMOs either dissolved or merged from 1999 to 2000. The sector’s recovery continued through the end of 2000, Weiss says.