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HMOs propose highest rate increases in four years, according to Industry Analysis

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Initial HMO premium rates will increase by approximately 14.1 percent in 2008 — the highest rate increase in four years, according to an analysis from Hewitt Associates, a global human resources services company.

As U.S. companies begin to negotiate HMO plan rates for 2008, data from Hewitt Health Resource™ (HHR) — a Web site that captures HMO rate information for nearly 160 large companies representing more than 1 million employees and annual premiums of nearly $3 billion — shows that initial 2008 HMO rate increases are averaging 14.1 percent, compared with 11.7 percent in 2007 and 12.4 percent for 2006. After plan changes, negotiations and terminations, final average HMO rates increased by 8.2 percent in 2007.

While the U.S. will see an overall increase in rates, two regions of the country — the Southeast and Midwest — will experience significantly higher than average rates next year, with variances in rate increases across regions, due to differences in demographics, provider costs, and common plan designs and coverage, as well as rates for health plans that target these areas.

According to this analysis, employers are considering a number of strategies to help mitigate the impact of high HMO premium increases on their health care budgets this year, including shifting costs to employees, aggressively negotiating with health plans and implementing strategies for keeping employees healthy.

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