Similar increases the last two years have sparked a modest turnaround in the HMO industry, but further increases are needed to satisfy shareholders. The reason these plans are doing better is they're raising premiums.
Nobody can lose money forever.
HMO's and health insurers offering managed care plans say the increases are necessary because medical costs continue to grow rapidly. Inflation is caused by the replacement of old equipment with new technology, the increased medical needs of an aging population and prescription cost increases. Managed-care companies say they need to pass these costs to consumers if they hope to be profitable. Employers are saying we have to bite the bullet and absorb this.