Insurance Center

SEATTLE, Nov. 18

For Health Maintenance Organizations (HMOs) the results from Milliman's 2008 Group Health Insurance Survey show an estimated premium rate increase for January 2009 renewals at 8.4% and for Preferred Provider Organizations (PPOs), 10.7% to 12.1%. Results for the PPOs are based respectively, on a high deductible plan and a standard lower deductible plan.

Premium increases compare July 2008 with July 2007 and assume no changes in benefit or cost-sharing levels. For HMOs it was 9.7% and 10.3% to 10.7% for PPOs.

The fact that the Milliman survey asks HMOs and PPOs to respond to a fixed set of benefits and demographics makes it unique. Three important factors are thus removed from the survey that often skew the results find in other health cost surveys and these are the differences in plan benefit design, levels of cost-sharing, and demographics of members. The increase in medical utilization and costs experienced by the HMOs and PPOs are reflected in these trends.

The latest survey also makes known the average savings of premiums that can be gained through adopting a $1,000 deductible in place of a $250 deductible, almost 12% and over 20% in savings is received by switching to a plan with a $2,000 deductible. Doug Proebsting, a co-author of the survey report notes that a high deductible plan can be an integral part of consumer driven health (CDH) plans, plans in which health savings accounts (HSAs) and healthcare reimbursement accounts (HRAs) are employed to aid in the coverage of the deductible and other out-of-pocket healthcare costs. According to the survey there is a continued growth in CDH plans. Respondents are anticipating that in 2009, fully 6% of their premium income will to come from these products.

Included in the 2008 report are trends and premium rates according to the survey responses, relating to medical and prescription drug coverage. The Milliman survey also includes hospital inpatient costs and utilization data, along with physician reimbursement levels, ratios for medical expenses, and levels of profits from Milliman databases. Included in the data results for the 2008 survey are information on prescription drug costs, broker commissions, and progress regarding the implementation of ICD-10 coding per survey responses. This is the 16th year in which the Milliman survey has been conducted.

Included in the survey were HMOs and fully insured PPOs serving the nation's commercial, large and mid-group employer market. Included in the survey are typically about 40% of all eligible insurers. Results are reported at the metropolitan area, state, region and nationwide levels. When possible, results for HMOs and PPOs are shown separately.

Founded in 1947 in Seattle Washington, Milliman is among the world's largest independent actuarial and consulting firms. Currently the company has 49 offices in key locations worldwide. With a professional staff reaching over a thousand qualified consultants and actuaries, Milliman employs over two thousand people. These include specialists, from clinicians to economists. The firm has consulting practices that include property & casualty insurance, healthcare, employee benefits, life insurance and financial services. Milliman serves a complete gamut of business, education, financial, union, government, and nonprofit organizations.