California Individual And Group Health Insurance Plans

PR Newswire - Oct. 25: Seattle - Results from Milliman's fifteenth annual survey of Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) indicate a slowing of premium increases. Reported 2006 premiums for the benefit plan provided are up 6% from 2005 for HMOs, the smallest change since 1997. PPO premiums for a standard $250 deductible benefit plan increased a modest 4% among plans responding in both 2005 and 2006.Complete results for the Milliman 2006 Group Health Insurance Survey are now available and include premium rates and trends by component, hospital inpatient cost and utilization data, physician reimbursement levels, medical expense ratios, and profit levels. Results are provided by metropolitan area, state, region, and nationwide. HMO and PPO results are shown separately. This year's survey results also include information regarding the implementation of Consumer Driven Health (CDH) products and disease management programs.Contributing factors to increasing insurance premiums include an aging population, higher costs per service, and increasing utilization of services.Hospital inpatient stays for HMOs have increased to 277 annual days per 1,000 members in the 2006 survey, up from 230 in the 2000 survey. "The aging population could be contributing to this phenomenon," says Doug Proebsting, co-author of the survey. For plans reporting in 2005 and 2006, HMO and PPO hospital inpatient costs per admission increased about 8% while professional fees increased about 5% for HMOs and 9% for PPOs.For 2007 renewals, HMOs anticipate premiums to increase 10 to 11% while PPOs anticipate premiums to increase 12 to 13%. However, these anticipated increases are on book or manual rates. Actual rate increases will likely differ due to group experience, contract negotiations, changes in cost sharing, and market conditions.The survey was sent to the nation's HMOs and fully insured PPOs that serve the commercial large or mid-group employer markets. Over one-third of those surveyed participated. The annual Milliman survey is unique in that it asks HMOs and PPOs to respond to a given set of benefits and demographics. The survey removes three important factors that can skew the results of a typical survey on health costs: differences in benefit design scope, cost sharing levels and member demographics.Survey results showed that the consumer could lower annual premiums by about $565 per member per year by increasing the deductible from $250 to $1,000 and could lower annual premiums by $900 per member per year by increasing the deductible from $250 to $2,000. A CDH plan can be an attractive option since a Healthcare Reimbursement Account (HRA) or Health Savings Account (HSA) is usually available to cover the higher deductible if medical expenses occur.Survey results indicate a vast majority of respondents are either currently offering or will offer a CDH product within the next year. Milliman's analysis shows that ninety-seven percent of respondents to the CDH portion of the survey expect to offer employers a high deductible plan with an integrated employee account, i.e., HRA or HSA. Insurers are about three times more likely, however, to offer spending accounts alongside a PPO plan than an HMO plan.Though generally available from insurers, a small but increasing number of employers/employees have thus far chosen these products. Among respondents, CDH premium revenue will be 3.6% of all commercial premium revenue in 2006.Respondents expect this amount to increase to 5.1% in 2007. However, both in terms of percentage of total premium and percentage of insurers currently offering HRAs or HSAs, reported growth in CDH products has been slower than respondents predicted in prior years.The number of plans offering provider quality information and treatment options to their members continues to grow. Seventy-two percent and ninety percent either currently or will provide within the next year provider quality information and treatment option information, respectively. However, those sharing hospital and physician services pricing information has stalled around fifty percent. Access to pricing information (often referred to as price transparency) is the one major component of CDH that has yet to be implemented on a large scale. This is significant since access to pricing information to make informed decisions is an important aspect of CDH.This year Milliman also explored issues related to disease management. "The results supported our expectation that plans believe disease management programs are more successful in improving patient health than reducing short or long term costs," said Proebsting. The most common programs focus on managing diabetes, asthma, coronary artery/heart disease and congestive heart failure. Maternity, obesity, and diabetes programs are viewed as having the greatest impact on reducing long term future healthcare costs.