In an effort to protect its market share, the University of Wisconsin-Madison's healthcare system said it will exercise an option to repurchase 76,000-member Unity Health Plans Insurance Corp., Sauk City, Wis., for $40 million. Unity was formed in 1994 when UW Health sold its U-Care HMO to Blue Cross and Blue Shield United of Wisconsin, now Cobalt Corp., which combined the U-Care HMO with the former HMO of Wisconsin. UW Health, Cobalt and a group of rural providers called Community Health Systems jointly operated Unity until last year, when Cobalt was acquired by WellPoint Health Networks. UW Health, uncertain how much Unity members would continue to use its provider network under WellPoint's ownership, decided to buy back the HMO under an option established in 1994. Unity earned $9.4 million on revenue of $232 million last year. The deal is scheduled to close by year-end, pending approval from the state insurance commissioner. UW Health includes the University of Wisconsin Hospital and Clinics, the medical school and an affiliated foundation.
Separately, HMO premiums are expected to rise 11% in 2005, 3.8 percentage points less than the 14.8% rise this year, according to preliminary survey results from Milliman, a Seattle-based consulting firm. It would be the sixth straight year of double-digit HMO premium hikes, Milliman said. Preliminary results for PPOs showed an expected 12% rate increase next year; there was no comparable number for 2004. Preliminary results of a Hewitt Associates survey released in June found that HMO rates for 2005 were rising 13.7% compared with 17.7% at the same time last year. Milliman's final results will be published in October. -- by Laura B. Benko