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HMO Rate Increases Slow

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HMO rates will increase about 11.7% in 2007, a human resources services firm reports.

Data from Hewitt Associates Inc. also shows despite the slowdown in the annual rate increase, employers are struggling to redesign plans and are splitting more costs with employees.

The 11.7% rise represents the fourth consecutive year of declining HMO rate increases, Hewitt notes. The company reported increases of 12.4% in 2006 and 13.7% in 2005.

In the Southeast and West regions, rates were increasing slightly faster. Preliminary analysis showed an 11% increase for the Southeast in 2007, compared with 9.4% at this time last year, and 13.7% for the West, compared with 10.9% last year.

“There do not appear to be market pressures that might cause rates to begin increasing again,” according to Paul Harris, senior health care strategist for Hewitt.

While the rate hikes have been declining, “double-digit increases are still very difficult for employers to absorb,” he noted. As a result, employers continue to make plan design changes and share more of the cost with employees.

Employers are increasing co-pays for prescriptions, specialty care and emergency room visits. The number of companies offering $20 office co-pays continues to rise, increasing to 29% in 2006, from 25% in 2005 and 16% in 2004, according to the analysis.

Also, the number of employers that require more than a $50 co-pay for emergency room visits increased to 52% in 2006 from 33% in 2005, 16% in 2003 and 7% in 2001.


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