HMO premiums are expected to continue rising at double-digit rates next year, though at a slower pace, according to preliminary data from Hewitt Associates, a benefits consulting firm. As companies begin to negotiate their coverage rates for 2005, data from 160 large employers representing more than 1 million workers show that initial HMO rate hikes are averaging 13.7% compared with 17.7% at the same time last year. After plan changes, negotiations and terminations, the average HMO premium rose 12.7% in 2004. "As we predicted last year, we're starting to see a moderation in healthcare premium increases, with the possibility of employers who aggressively manage their healthcare spending seeing increases in the single digits for the first time in five years," said Ken Sperling, East market leader for Hewitt's Health Management Practice.
Despite cost moderation, employers have continued to pass more of the costs along to their workers, Hewitt found. For example, the number of employers requiring a $20 copayment for a physician office visit nearly doubled to 16% in 2004 from 9% in 2003, while the number requiring a $15 copayment climbed to 47% from 24% in 2002. Meanwhile, employers requiring $10 copayments dropped to 29% in 2004 from 58% in 2002. -- by Laura B. Benko