The early numbers are in, and it looks like health maintenance organization premiums next year are likely to increase an average of 12 percent in California and the West.
That's slightly above the nationwide 11.8 percent increase anticipated in a new report by Hewitt Associates, a human resources consulting firm based in Lincolnshire, Ill. The company distilled its data from 160 large companies representing about 1 million insured individuals.
Jeff Smith, a Hewitt consultant and leader of the firm's HMO rate study, said that Northern California rates tend to be higher than those in Southern California because there are fewer HMO companies competing for enrollment.
"It's all about supply and demand," Smith said.
The actual average HMO premium increase won't be known for months, since many companies are negotiating new contracts between now and the end of the year. Smith said the average will likely drop a bit as more contracts are finalized.
Last year, for example, preliminary figures indicated rates nationally would rise by 11.6 percent; the final tally showed a 9.4 percent boost. In the West last year, premiums increased an average 10.2 percent.
The Hewitt analysis comes one month after the California Public Employees' Retirement System said its 2009 overall HMO premiums would increase 6.57 percent, well below the regional and national averages. The fund, with $229 billion in assets, provides health benefits to about 1.2 million public employees, retirees and their families and is the nation's third-largest health insurance purchaser.
That massive size gives CalPERS bargaining power – and results in higher rates to other HMO purchasers, Smith said.
"For those (less expensive) plans to be offered to CalPERS, they have to be subsidized by the private market," Smith said. "It's basic cost shifting."
Kaiser, which has 458,000 CalPERS members on its rolls, has said that its CalPERS rates are based on estimates of what it takes to service that group and that it doesn't shift costs to other groups or individual members.
According to the nonprofit Kaiser Family Foundation, half of California's medically insured, about 18 million residents, had HMO coverage in 2006, the last year with numbers available.
Hawaii ranked second with 46 percent, or 582,000 residents, in an HMO plan. About 71 million Americans, roughly 29 percent of the nation's medically insured, get their coverage through an HMO.
Call The Bee's Jon Ortiz, (916) 321-1043.
