What's really favorable about any rate increase? Right? However, recent survey work by some large actuarial firms are telling us that at least things will stay in the manageable range - unless you are with a carrier that doesn't want your business any longer and they let you know that by your 27% rate increase!
Healthcare trends for HMO plans are looking to be approximately 11% with PPO plans tracking about 11.2%. Why so close you ask? Shouldn't there be a larger spread? Historically there was. However, with capitation rates increasing, HMO plans across the country are becoming less prevalent. PPO plans are replacing them and discounted fee for service is becoming more the norm. PPO plans are now just as effective as HMO plans may have been in managing costs - that's another blog subject. That is why the spread is not larger any more. Southern California is the last bastion for HMO's in the country and there is still some advantage financially for HMO programs in that market. However, that too will change.
Anyhow, from a financial perspective, make sure you budget 11% into your numbers for the upcoming year for rate increases.
Wednesday, June 20, 2007
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