HMO's Post First Quarter Profit

Nineteen of Wisconsin's 20 HMO's announced 1st quarter profits Monday. The profits come in the wake of annual premium increases for policyholders.

Security Health Plan in Marshfield made $1.6 million, but Chief Administrative Officer John Smylie says they paid out $82 million in claims, and only made a two percent profit. Smylie says the rise in premiums is a reflection of the rising cost of health care, not the cause of it.

HMO's estimate what they will pay out in claims for a year and then raise the premiums to match. The fact that Security had a relatively slim profit margin indicated they were very accurate and that the rising cost of health insurance could remain constant at around 14 percent for next year.

Smylie says HMO's are in a tough position because if they don't make a profit the State Insurance Commission can take them over, and if they make too much people complain that their rates are too high.

Smylie says Security Health Plan is non-profit, and the $1.6 million will be saved for future claims.

Smylie says there are many factors behind the rising cost of health care, including an aging population, the demand for new technology, and the cost of prescription drugs.

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