Managed care premiums to jump another 12-13%
May 5, 2003
BALTIMORE - Look for managed care companies to raise premiums by 12-13% in 2003 while medical costs keep pace at 11-12%.
These estimates, published in March by CMS in another installment of its ongoing â€˜Market Update’ series, continue an upward trend that began conservatively at 2% in 1997 and hit double-digit growth in 2001. Last year premiums rose 12.7%.
While profits margins publicly traded managed care companies declined from 1994 to 1999, they have climbed from 1.8% in 1999 to 4.4% in 2002. Since a three-year upswing in the underwriting cycle is expected to continue, industry analysts expect see profits climb still higher for payers.
“Strong pricing and a slowdown in health spending inflation should lead to record profits in 2003,” according to Charles Boorady, an analyst at Salomon Smith Barney who is quoted in the CMS report.