HMOS HEALTHIER

Physician's Money Digest, March15 2003, Volume 10, Issue 5

Double-digit health insurancepremium increases may be badnews for consumers, but they havehelped restore a rosy glow to thebottom line of many HMOs. Accordingto a Merrill Lynch reporton 11 major HMOs, only Cignareported a loss in the third quarterof last year. The average jump inthird-quarter earnings for the other10 was a whopping 47%. Helping tofuel the surge in profits was thethird straight year of premium hikesthat came in higher than the rate ofinflation in health care services.Premiums were up 15.4% in 2002and are expected to rise by at leastthe same percentage this year. Incomparison, the health care inflationrate last year was 12%.