FOR IMMEDIATE RELEASE:
December 23, 2002

FOR INFORMATION CONTACT:
Kelley Elwood, 312/580-6497
Elizabeth Morgan, 312/853-6528

Premium Increases Lead to HMO Profits
Despite Decline in Enrollment;
Medical Society Guide to Help Patients
with HMO Enrollment Decisions

Chicago, IL -- As patients and employers continue to struggle to find affordable health insurance, the Illinois State Medical Society today issued its annual guide to Illinois Health Maintenance Organizations. Significant findings indicate that HMOs are turning a profit, while the cost of premiums continues to soar and enrollment in HMOs continues to decline.

In 2001, there were 27 HMOs operating in Illinois. Of the 22 that did at least 10% of their business in this state, the total profits increased, on average, to 6.2% of total revenues. At the same time, the average percentage of premium dollars going toward medical care for Illinois patients decreased from 86.3% to 74.1%. The average cost of premiums per patient increased 4.6% from $1,832 to $1,917 per person, while actual enrollment decreased by 5.3%.

These numbers reflect the growing concern amongst physicians who believe some health insurers are pocketing premiums instead of reinvesting income in patient care.

"Illinois doctors are taking on insurers in the legislature and in the courts, hoping to shed some light on their business practices," said John F. Schneider, MD, president of the Illinois State Medical Society. "We are witnessing cases where health insurers are not forthcoming about how they manipulate their payments to patients and doctors," added Schneider, referring to the Fairness in Healthcare Contracting bill introduced this year by ISMS.

While these figures provide some insight into the business practices of HMOs in Illinois, the guide is meant to help consumers and their employers in the decision-making process of choosing a health plan. Individual pages on each HMO are a resource to help readers make value comparisons between plans.

The guide looks at the individual plans' medical expense ratios (the percentage of the plan's total revenues spent actually providing medical care to patients), administrative expenses, premium costs and utilization data. It also includes information on complaints filed with the Illinois Department of Insurance regarding each plan.

"Patients seeking HMO coverage have many choices here in Illinois, " said Schneider. "The data in this guide can be used to determine whether an individual plan is in a financial position to cover adequate patient care," Dr. Schneider said.

The ISMS Guide also reports on each HMO's longevity, size, geographic areas of coverage and financial stability, and lists those HMOs that serve Medicare or Medicaid patients. Highlights of the ISMS-backed Managed Care Reform and Patients Rights Act, which was passed in August 1999, are also included.

The information in the guide was taken from each HMO's 2001 annual report. These reports must be filed yearly with the state's Department of Insurance, and are publicly available. All HMOs were offered the opportunity to explain and comment on the information reported about it; comments received are included in the guide.

The guide is available for no charge at the ISMS site at www.isms.org or in hard copy by contacting ISMS at 20 N. Michigan Ave., Ste. 700, Chicago, IL 60602 or calling 1-800-782-ISMS.

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The Illinois State Medical Society is a professional membership association representing 14,000 physicians statewide practicing in all specialties.