Enrollment in Illinois health maintenance organizations continues its slide and has dropped below 2 million for the first time in a decade, a new report shows.
An annual study by Minneapolis-based health-care consultant Allan Baumgarten echoes similar studies done in other states and the nation showing HMOs, the most restrictive form of health-care coverage, losing ground to other forms of health insurance.
HMO enrollment decreased by 6.8 percent in 2003 to 1.89 million and by another 2.7 percent in the first half of 2004 to 1.84 million, according to the Illinois Managed Care Review 2004. Less than 15 percent of Illinois residents are enrolled in HMOs.
HMO enrollment in Illinois has typically been less than 20 percent, which is around the national average, Baumgarten said.
By comparison, rural states have little HMO penetration while such plans dominate the health insurance landscape in certain parts of California, with more than 50 percent enrollment.
At its peak Illinois enrollment in HMOs hit 2.4 million in 1999.
Employers and people with health coverage in Illinois, particularly the Chicago area, have always had more interest in less restrictive forms of health insurance coverage, such as preferred provider organizations, which allow patients more choice, albeit at a greater cost. HMOs restrict choices of doctors and hospitals to their networks.
“On the commercial side, both the employers and health plans have moved very deliberately away from HMOs,” Baumgarten said.
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These days, however, HMOs aren’t all that different from other health plans, so there is less reason for an employer to choose one. HMOs have eased some restrictions that prevent patients from staying longer in the hospital, for example, or have opened up coverage to more medical treatments in the face of consumer backlash, lawsuits by plaintiffs’ attorneys and various state patients’ rights laws.
Furthermore, HMOs operate in a more highly-regulated environment than PPOs, which offer employers greater flexibility to pass along costs.
Most state insurance departments don’t even track the number of subscribers in PPOs or other health plans as they do HMOs.
“Employers want plans with more flexibility for cost-sharing by enrollees in the form of deductibles and co-payments, and that is easier done in a PPO product,” Baumgarten said.”
There are those who see an opportunity for HMO growth to rebound in at least one area: the Medicaid population. With the Bush administration proposing the possibility of reducing the federal share of government spending on medical care for the poor, HMOs here see their form of coverage as a way to save money.
HMOs argue that restricting doctor and hospital choices to their networks makes them a cheaper and more cost-effective alternative to fee-for-service Medicaid, especially as states like Illinois wrestle with budget issues.