Weiss: HMOs Return To Profitability

"This is not only good news for the HMOs themselves, it's also a positive for consumers who count on their HMO to be financially healthy and stay in business," says Weiss Ratings Chairman Martin Weiss. "But the improvements have not come without costs to the consumer, such as premium hikes and service cutbacks, and they have not been evenly distributed across the industry. In fact, more than one-third of HMOs are still considered vulnerable."

Premium rates increased by more than $300 per enrollee, to $1,842 in 2000, from $1,506 in 1995.

Medicare HMOs dropped 1.6 million seniors were dropped between 1999 and 2001, and many were forced to seek health coverage elsewhere, Weiss says.

Moreover, uncertainties remain. The Weiss study found that the 31 largest HMOs generated most of the profits. The big HMOs reported a total net profit of $1.2 billion in 2000.

The 461 other HMOs reported an aggregate net loss of $258 million.

Weiss argues that 194 HMOs, or 41% of the total, are still vulnerable.