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2003 HMO rate increase highest in 11 years

HMO rates jumped on average 17 percent in 2003, and higher health insurance costs for consumers are likely on the way. This double-digit increase is the biggest in 11 years, according to a survey by Milliman USA. According to Milliman, HMO rates rose by 16 percent in 2002, the second-largest HMO rate increase since 1991.

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"If it holds, this 2003 increase will mark the third year in a row of double-digit increases," says Steve Cigich, author of the Milliman survey. "Increases of this level cannot be sustained without significant reaction in the marketplace. I look for employers to increase employee responsibility regarding health care financial decisions."

Out of the 400 HMOs surveyed, 100 responded: 95 expect increases higher than 10 percent and more than 70 predict increases higher than 15 percent. Milliman says that the increases are a result of higher provider expenses and rising consumer demand.

In the South Atlantic, West South Central, and Mountain regions, rates are expected to go up 19 percent. The lowest increase of 14 percent is expected in the East North Central region, including Illinois, Indiana, Michigan, Mississippi, Tennessee, Ohio, and Wisconsin.

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