HARTFORD, Conn. — Responding to pressures from consumers, employers and the Clinton Administration, the nation's health insurers are planning to curtail increases in premiums sharply next year, according to industry analysts.
Health maintenance organizations are raising premiums by an average of 5.6% next year--down from 8.1% this year and the fifth consecutive year of decline, according to a study by the Group Health Assn. of America, a trade group.
Premiums for traditional indemnity health insurance are also expected to rise more slowly. While there are no available nationwide statistics for those plans, experts predict an average premium increase of about 12% next year--also below the previous year.
To many experts, these trends result from a shift in market forces as well as the insurance industry's effort to placate critics in Congress who are currently writing legislation to reform the health care system.
The shift is almost certain to be cited by various factions in the looming health care reform debate. Advocates of a strong government plan, like the one proposed by the Administration, can argue that the decline shows the positive influence government can have over the health care industry.
Those who oppose a central government role in health care, however, can point to the figures as proof that market forces and the industry itself will keep costs in line. They can also note that the decline in annual increases began five years ago, long before health care reform became a national issue in the 1992 presidential election.
The slowing trend was especially apparent here in the capital of the insurance industry, where Blue Cross & Blue Shield, Connecticut's largest health insurer, filed a rate request seeking increases averaging 3% to 4% for groups with more than 50 employees.
In California, Kaiser Permanente announced its premium increases would average 4.1%.
William Custer, health care economist for the Employee Benefits Research Institute, credits Administration "jawboning" about health care costs for causing both the industry and consumers to be more cost-conscious.
"You can be cynical and say that the insurance industry is running scared," Custer said. "But it's also raised the consciousness of consumers. They are being jawboned as well."
John Kleiman, health insurance industry analyst for the consulting firm of Conning & Co. in Hartford, said many insurers are aware that the double-digit increases of the past have spawned an outcry from consumers, employers and politicians--leading to the movement for health care reform.
"That's got to be in the back of everybody's mind," he said.
The Group Health Assn. of America also announced that enrollment in HMOs increased by 3.5 million people over the past year. HMO enrollment is now at 45 million, and the group predicts that it will reach 50 million by the end of 1994--a reflection of the number of people who are shifting away from indemnity plans.
The trend toward lower-cost HMOs is likely to further dampen health care costs in the years to come, according to Kleiman.
Jack Massimino, executive vice president for FHP Inc., a Fountain Valley-based health maintenance organization, said the pressure to hold down premiums comes not from the government but from stiff competition between managed care providers.
With California ahead of the nation in enrolling members into HMOs, Massimino said that companies, which purchase the health insurance for their workers, have created a buyers' market.
"What is happening is the employers are out there shopping for the best plans," Massimino said. "The pressure is coming internally, among the plans themselves, not anywhere else. It's simply a response to the competitive marketplace."
As a result, Massimino said, the average premium hike among California's HMOs this year was 5%, more than three percentage points lower than the national average.
He estimates that FHP, which has recently announced layoffs and a corporate restructuring, will only hike its premiums by 4% this year.
Rich Lipeles, executive vice president PacifiCare Health Systems Inc., a Cypress-based HMO, said his firm has also held costs to about 5% this year and expects premium increases of between 3% and 6% for 1994.
"I think lower increases are a reflection of market pressures combined with the success of managed care companies in California getting better at managing health care costs," Lipeles said. "I think that we (in California) should be doing better than the national average because of our experience."
Consumer groups, which welcomed the news of smaller premium increases, said the insurance industry is responding to the Administration's threat to regulate insurance premiums in the future.
"Health insurance prices were like a semi-truck barreling down the interstate," said Ed Rothchild, spokesman for Citizen Action, a national consumer organization. "Then it was as if they saw a cop sitting by the road and they slammed on the brakes.