OHIO HMOS Report: Enrollment falls as profits rise

Some employers are looking at other options as premiums rise.
COLUMBUS (AP) -- Higher premiums helped Ohio's HMOs make record profits in 2003, according to a new report that also shows the number of Ohioans enrolled in plans has declined to its lowest level since 1994.
After years in which health maintenance organizations broke even or lost money, HMOs posted a $129.7 million profit in 2003, according to Allan Baumgarten, a health care consultant who prepared his eighth annual report of Ohio's health care market. He has tracked profits going back to 1992.
The profit amounted to 3 percent on revenues of $4.3 billion, or about $29 a month for each covered person, he said.
Meanwhile, the number of Ohioans enrolled in HMOs fell 10 percent in 2003 to below 2 million and continued to fall into 2004 from the peak of 2.9 million in 1998.
"It's sort of counterintuitive," Baumgarten said Thursday. "Most businesses improve profit by improving volume."
HMOs are prepaid plans that sell health insurance and provide comprehensive care. The HMO employs or contracts with health care providers.
Reason for decline
Baumgarten said much of the decline comes from employers looking at other options after experiencing double-digit premium increases the past several years. Other options including switching to lower-priced alternatives that are often administered by the same company that used to run the HMO, shifting more costs to employees or dropping coverage for employees altogether.
Part of the decline also comes from the 230,000 jobs that have been lost in Ohio the last several years, but Baumgarten said he did not know how much that factored into the decline.
HMOs increased premiums by nearly 9 percent in 2003 following increases of 17 percent in 2002, 18 percent in 2001 and 12 percent in 2000, according to the report.
Prices for HMO coverage has gone up so much that HMOs are losing the price advantage they had on other forms of coverage, he said.
Kelly McGivern, president and chief executive of the Ohio Association of Health Plans, said that after years of losses, HMOs have become profitable by doing a better job of pricing services.
McGivern said one factor that has hurt HMOs is state regulations that have limited what they could require in the way of co-pays and prohibited them from offering plans with deductibles. She said those regulations were changed this year.
"It really put HMOs at a disadvantage in the market place," she said.
What's limited HMOs
Baumgarten said consolidation within the Ohio market and the withdrawal by some insurers has limited the number of HMOs to a handful of options in most parts of the state.
The one area that has had growth is the state's Medicaid program, where enrollment in 2003 was up 20 percent for the second consecutive year. There are now 486,000 people enrolled in HMOs under Medicaid, the state-federal health care program for the poor.
Dennis Evans, spokesman for the Ohio Department of Job and Family Services, said enrolling Medicaid recipients in HMOs programs has saved the state money and helped recipients stay healthier through, for example, regular doctors' visits.
McGivern said there is plenty of room for Medicaid HMOs to grow in Ohio as the state looks to save money.
And after several years of decline in Medicare HMOs, Baumgarten is looking for growth in the programs for senior citizens as the federal government increases its reimbursement levels for insurers.
Despite the decline in enrollment, employers may give HMOs another look if they can get more flexible options, Baumgarten said.
McGivern said, "The important thing is for people to realize that an HMO may work for one person, but not someone else so it's important to have a variety of products available."