Health plan rates heading upward

JERRY GEISEL and ROBERT KAZEL

Health maintenance organizations are hitting employers with the first significant rate increases since the early 1990s, with more bad news just around the corner.

'Definitely, the trend is upward,' said Ed Baird, senior vp for sales and marketing at Prudential HealthCare in Roseland, N.J.

Prudential HealthCare reports rate increases averaging 6% to 9% for managed care plans with July I renewals, compared with rate increases ranging from 4% to 6% for the first half of this year.

While HMO rates generally climbed 3% to 5% this year for employers with Jan. 1 renewals, the range of rate hikes for 1999 will be about double that, with rates generally expected to climb 4% to 10%, HMO executives and others say.

Rates also will be increasing for other types of health care plans. Point-of-service plan rates generally will rise one or two percentage points more than HMOs increase, while rates for preferred provider organizations will climb by 6% to 10%. Traditional indemnity plan rates will increase 8% to 12%.

Indeed, rate hikes for the small percentage - generally 15% to 20 % - - of employers that renew July 1 were higher than for employers with Jan. 1, 1998, renewals.

At Santa Ana, Calif.-based PacifiCare Health Systems Inc., larger and national accounts will see rate HMO rate increases of 6% to 8%, though HMO rates for small and midsized accounts could rise 8% to 10%, said Arnold Hebert, senior vp of sales and marketing.

POS plan rates will rise about 10% for all types of accounts, Mr. Hebert said.

But rates are rising much more steeply for some employers, especially small companies with adverse experience.

One such company is South Everson Lumber Co. in Everson, Wash. The company's PPO hit it with a 14.4% rate increase. Denise Hayes, office manager for the 137-employee company, said paying the hefty bills …