State's tough stance puts HMOs in bind. (Washington State will not pay higher premiums for its employees)

State's tough stance puts HMOs in a bind

HMO Washington, a small Seattle-based health maintenance organization, will swallow a bitter pill this summer when it loses 40 percent of its members.

The HMO is dropping its coverage of nearly 7,000 state workers and dependents effective July 1, says CEO Mark Hawkins, because the state won't pay significantly higher premiums.

Larger HMOs such as Group Health aren't doing anything as drastic as walking away from the state account, which represents a big chunk of business for every HMO in the state.

Instead they're cutting benefits to the state employees they cover.

But as they strive to keep this all-important account, the HMOs could wind up raising the premiums paid by other employers and individuals, predicts one …