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Following Trend, Michigan HMOs Lose $42 Million

Despite enrollment growth, HMOs in Michigan lost $42.6 million last year due to lower premium revenues, and lost another $21.3 million in the first quarter of 1998. The 1997 loss was 1.1 percent of the plans' revenues of $3.7 billion, and followed surpluses of $40.4 million in 1996 and $105.2 million in 1995.

The financial results are among trends and issues analyzed in "Michigan Managed Care Review 1998" by Minneapolis-based managed care analyst Allan Baumgarten, who has also analyzed managed care trends in Colorado, Illinois, Minnesota and Ohio. Baumgarten attributed Michigan HMOs' financial problems to continuing pressure on commercial premiums, rising medical costs and reductions in Medicaid payments. Michigan plans saw their medical loss ratio increase from 90.1 percent in 1996 to 92.5 percent last year.

HMO enrollment in Michigan increased 11.4 percent to 2.4 million. One fourth of Michigan residents are in health maintenance organizations.

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