The number of enrollees in HMOs dropped for the first time ever between January and July 1999, according to a recent study.
InterStudy Publications, based in Bloomington, Minn., found that HMO enrollment dropped by more than 500,000 enrollees--or about 0.6%--between Jan. 1, 1999, and July 1, 1999, the most recent time period for which data are available.
Traditionally, people enroll in their health plan by Jan. 1, so final 1999 data will not be available until later this year.
The six-month decline is linked to the rising cost of healthcare and the lack of choice in traditional HMOs, says Peter Boland, president of Boland Healthcare in Berkeley, Calif.
"Most health plans have run out of answers on how to save additional costs," Boland says. "Large employers are throwing in the towel, saying, 'We're going to have to look for a different structure.' More employers are moving toward defined contribution.
"(HMOs) have under-invested and not taken seriously customer satisfaction," he says. "They're still at war with the physicians, who are their No. 1 ally in terms of cost containment."
Annual growth rate between July 1998 and July 1999 was 2.6%, the study found.
Total HMO enrollment, including Medicare and Medicaid managed care programs, stood at 80.82 million. That was an annual increase of slightly more than 2 million enrollees since July 1, 1998.
HMOs reached their peak enrollment increase in 1996 with a 18.5% growth rate. Since then, the growth rate has been falling steadily.
Last year's enrollment decline occurred at the same time HMOs announced the first significant rate increases. In the 1980s and 1990s, HMOs kept their premiums artificially low to attract more business. Rate increases for 1999 and 2000 were close to or in the double digits.