Health Insurance Daily

Survey Examines Premiums, CDH Trends

Health care premium increases are slowing down, according to a survey of HMOs and PPOs serving the large and mid-group employer markets conducted by consulting firm Milliman.

HMO premiums for 2006 are up 6% from 2005, which is the smallest change since 1997. Similarly, PPO premiums increased 4% for a standard $250 deductible plan from 2005 to 2006. For 2007 renewals, HMOs anticipate premiums to jump 10% to 11%, while PPOs anticipate premiums to rise 12% to 13%.

Over the past few years, health care services were used more often at higher prices than in earlier years. Hospital inpatient stays have increased to 277 annual days per 1,000 members for HMOs this year, up from 230 in 2000. "The aging population could be contributing to this phenomenon," says Doug Proebsting, co-author of the survey.

HMO and PPO hospital inpatient costs per admission increased 8% from last year to this year, while professional fees rose 5% for HMOs and 9% for PPOs.

Although the survey indicates growth in consumer-driven health plans has been slower than insurers predicted in prior years, 97% of employers expect to offer a high deductible plan with an integrated employee account. CDH premium revenue will be 3.6% of all commercial premium revenue for health insurers in 2006, and insurers expect this amount to increase to 5.1% in 2007.

The study also indicates employers could lower annual premiums by $900 per member per year by increasing the deductible from $250 to $2,000.

Article provided by BenefitNews 11-2-06.

posted by Mike @ 8:00 AM