Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, December 8, 1994 TAG: 9412220009
SECTION: BUSINESS PAGE: B10 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON LENGTH: Medium
Health insurance premiums will drop for the first time next year for the 50 million-plus Americans enrolled in health maintenance organizations, an industry group said Wednesday.
The prepaid health plans will charge on average $145 a month for an individual and $392 for a family policy, the Group Health Association of America said. Those are savings of $2 and $11 from this year's rates - a 1.2 percent decline overall.
Enrollment in HMOs surged by 5.3 million - 11.6 percent - this year to 50.5 million, and the trade group forecast that 56 million Americans will be in HMOs by the end of 1995. It based its estimates on a survey of 71 HMOs with 8 million members.
Many employers are steering their workers into HMOs or other forms of managed care in hopes of economizing on health expenditures. An HMO is generally considered the lowest-cost form of health insurance.
HMOs are not currently available to most Western Virginia residents, however, although several companies are poised to recruit business in the area once they are licensed. Only Partners National Health Plans of North Carolina Inc. has been licensed by the State Corporation Commission.
A joint venture between Carilion Health System of Roanoke and Trigon Blue Cross-Blue Shield of Richmond is marketing the Healthkeepers plan under a previous Trigon license. Heritage National Healthplan has offices in the valley but is not yet licensed.
Karen M. Ignagni, Group Health Association of America president, said consumers are being drawn to HMOs by their ``philosophy of prevention.'' Most people in HMOs had a choice of health plans where they worked, and they elected not to join costlier, fee-for-service plans.
Jon Gabel, the research director for the HMO trade group, said the prepaid plans are ``now reaching a critical threshold'' where they are big enough to exert downward pressure on medical prices.
``Seven years ago, HMOs were beating on doors to get hospitals and doctors to join their networks,'' said Gabel. ``Now we are seeing physicians particularly beating on the doors to get into HMOs.''
The projected 1.2 percent premium decline follows three years in which HMOs raised premiums by 10.6 percent, 8.1 percent and 5.6 percent.
Medical inflation tapered off this year as President Clinton tried but failed to convince Congress to enact universal health coverage, including limits on premium increases.
KPMG Peat Marwick, a private benefits and professional services firm, says overall U.S. health insurance premiums rose just 4.8 percent in 1994, down from 8 percent in 1993. It based the figure on a survey of firms with 200 or more employees.
Gary Ward, a principal in the firm's Los Angeles office, predicted even smaller premium increases next year.
``We're seeing just absolutely incredible numbers on renewals and new business coming up from the underwriters, much lower than we would have expected,'' Ward said.
HMOs, which charge a single rate, which does not vary by how sick or well a person is, have ridden the crest of an employer-driven wave of managed care.
Enrollment in HMOs has climbed from 9 million in 1982 to 26 million in 1986 to 50.5 million today.
Two-thirds of HMOs are operated by for-profit companies. Some are sponsored by Blue Cross-Blue Shield plans; some, like giant Kaiser-Permanente, have full-time doctors on staff and own their own facilities; others contract with individual physicians and hospitals.
Staff writer Sandra Brown Kelly contributed to this story.
by CNB