HMO Rate Increases Could Be Lower Again

Rate increases at health maintenance organizations are expected to be lower for the second year in a row as the insurance business becomes more competitive and employers continue to shift more costs to workers, a new study indicates.

The 2005 increases are still expected to be steep, however, and are unlikely to sink to the single digits, said Hewitt Associates, which conducted the study.

As companies begin to negotiate HMO rates for 2005, the average increase offered by insurers is 13.7%. At this time last year, when companies were negotiating 2004 rates, the average jump was 17.5%. After companies negotiated and changed their plan designs, last year’s average HMO rate increase was 13%, down from 16.6% in 2003.