HMO enrollment grows, national study finds
HMO enrollment grows, national study finds
Growth, profitability vary by market
The number of geographic markets with relatively high managed care penetration is growing, a new study from Minneapolis-based InterStudy Publications finds. However, HMOs had have limited success in reducing their medical expense ratios, and per-member-per-month (PMPM) medical costs are continuing to increase, the study finds.
As of January 1998, there were 149 markets with managed care penetration rates of 25% or greater, according to InterStudy’s report, Regional Market Analysis 8.2. This represents a substantial increase from the comparable 1996 period, when only 71 metro areas had managed care penetration above 25%.
Heavy penetration
The data show managed care penetration building in Pittsburgh (see chart, p. 32), one of the most heavily penetrated large markets, with a penetration rate of 53.5%. Pittsburgh’s penetration rate is well above the 75th percentile compared to other large markets (cities with a population of 1 million or more).
The three most highly penetrated large markets measured in the InterStudy report are Rochester, NY (71.4%), Sacramento, CA (66.1%), and Buffalo-Niagara Falls, NY (64.8%), the study finds. The three most highly penetrated medium markets are Santa Rosa, CA (74.3%), Boulder-Longmont, CO (71.5%), and Worcester, MA (70%). The three most highly penetrated small markets are Burlington, VT (79.7%), Springfield, IL (72.8%), and Pittsfield, MA (63.2%).
Total PMPM revenue received by health plans grew slightly for year-end 1997 compared to year-end 1996, the report says.
Another InterStudy report, The InterStudy Competitive Edge, found that medical expense ratios among health plans across the country continue to average around 89% to 90%, while average medical expenses for all metro areas totaled $124 per member per month. Why are these expenses still so high? "Managed care has been around a while [in many markets], and a lot of the fat has been cut out," says Tammy Lauer, research manager for InterStudy’s Competitive Edge series. "Plans got to a place where they couldn’t cut anymore. Even though premiums have finally been raised in the last year, this is basically making up for years of losses."
For a copy of the InterStudy reports, contact the company at (800) 844-3351.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.