CMS: managed care premiums staying ahead of projected medical costs - Industry Watch - Brief Article

Healthcare Financial Management, May, 2003

Most managed care organizations have grown "healthier" during 1999-2002, according to the GMS Market Update on managed care organizations released March 24. Profit margins increased from 1.8 to 4.4 percent for the publicly traded companies. The Blue Cross Blue Shield plans, the publicly traded Medicaid HMOs, and Kaiser Permanente--the largest not-for-profit HMO in the country--showed similar improvement. The positive change has been attributed primarily to premiums rising at double-digit rates (8.3 percent in 2000 11.0 percent in 2001, and 12.7 percent in 2002) and staying ahead of medical costs. For 2003, that trend is expected to continue with premiums projected to rise 12 to 13 percent while medical costs go up 11 to 12 percent, on average.

Although HMOs have maintained about Z7 percent of the health plan enrollment over the past five years, the combined preferred provider organization and point-of-service enrollment has gone from 59 to 70 percent. Medicaid, the only area in which managed care is expected to grow, includes 58 percent of the beneficiaries enrolled in HMOs. The report looks at the trends of increasing employer cost sharing and self-funding, and medical cost components, along with discussion of the managed care organizations' approaches to holding down pharmacy and other costs.

See the complete report at www.cms.gov/reports/hcimu/hcimu_03242003.pdf.>

COPYRIGHT 2003 Healthcare Financial Management Association

COPYRIGHT 2003 Gale Group