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MANAGED CARE April 2001. ©MediMedia USA

Sidebar to: RECESSION-PROOF: Why HMOs Could Thrive In the Economic Downturn

Recession? What recession?

What's bad news for most industries might be good news for managed care. In October 2000, Towers Perrin surveyed 221 large U.S. corporations representing about 7 million people (employees and dependents) to find out how much they were spending on health care. "Following a period of relatively modest growth in health care costs during the mid-to-late 1990s, the year 2000 marked a return to double-digit increases not seen in almost a decade," the survey reported. The findings are based on actual increases in premium rates.

Employers see a 13 percent spike in costs

Health care costs for the elderly soar

The report goes on to say: "Much of the double-digit increases reflects significantly higher costs of plans for retirees, particularly those age 65 and older. This is, in part, a direct result of the escalating cost of prescription drugs." Contractually obligated employers cannot "downsize" retirees off of health care benefits.

No relief in sight for employers

Employers expect overall health plan costs to grow in 2002 at nearly the same pace as this year's growth, with Medicare HMO expenses climbing at a greater rate than any other plan costs. These numbers seem to indicate that a protracted recession (one lasting more than 18 months) might result in a protracted boom for the managed care industry.