Michigan HMOs enjoyed record profits in 2004, nearly 30% higher than in 2003, while employers move toward greater consumer cost-sharing, according to a study by managed-care analyst Allan Baumgarten. Michigan HMOs collectively earned $262.2 million in 2004, roughly 3.8% of their $6.8 billion in member revenue. That compared with net income of $200.7 million in 2003, or 3.1% of the plans' total revenue of $6.5 billion. Enrollment in commercial health plans declined for the fourth straight year, to 1.75 million from 1.96 million in 2000. Medicare HMO enrollments also dropped, but Medicaid HMOs added 5,000 members for a total of just under 900,000, representing about 33% of all HMO enrollees in the state. Baumgarten said national health plans appear to be eyeing Medicaid HMOs as business opportunities. Premiums rose an average of 10.5% per member per month, the fourth consecutive year of double-digit growth.
Baumgarten said when he first published the Michigan Managed Care Report in 1997, automakers were turning to HMOs instead of PPOs to lower healthcare costs. "Nobody would send people to an HMO now to save money," he said. "They are viewed as rich benefit plans that don't allow employers to increase deductibles." Read highlights of the report. -- by Mark Taylor