Employers face 10.5% cost increase
Increases consistent with a year ago, but sluggish economy creates worse situation for many employers and employees
CHICAGO, Aug. 25 /PRNewswire-FirstCall/ -- Health care costs are expected to increase on average 10.5 percent in the next 12 months,(1) according to Aon Consulting.
Aon Consulting surveyed more than 60 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans. These are slightly lower than one year ago, when HMO cost increases were 10.6 percent and POS plans were 10.5 percent. PPOs and CDH plans remain steady at 10.7 percent and 10.5 percent, respectively. (See below for trend data from Aon Consulting's prior health care surveys.)
"Aon Consulting conducts a health care trend survey twice a year to forecast the expected future increase in employer-provided health plan claims cost, before any plan changes, based on input from leading health plan actuaries," said John Zern, Aon Consulting's U.S. Health & Benefits Practice director. "This data helps employers evaluate the competitiveness of health insurance premium renewals. For employers with self-funded health plans, it helps in developing future claim estimates for budgeting purposes.
"While we're seeing a slight decrease in the trend rates, it's still at double digits, and this year, it's compounded by a struggling economy, lower wage increases, and in some cases, salary freezes." Aon Consulting's U.S. Health & Benefits Chief Medical Officer, Dr. Paul Berger, acknowledges there has been progress in lowering the medical trend rate during the last several years, but emphasizes there's still significant work to be done. He suggests wellness and health promotion initiatives are critical in the next phase of lowering the medical trend rate.
"Approximately 30 percent of workers have chronic medical conditions, which account for 65 percent of this nation's medical spend," said Berger. "Wellness programs provide a strong platform for effectively managing chronic conditions and preventing future problems, but it's up to the individual to take advantage of the programs offered. Behavior change is never easy, but those willing to make changes in this capacity benefit from better health and lower health care costs."
Prescription drug costs are expected to increase 9.3 percent, which is slightly lower than the 9.4 percent trend rate one year ago. The specialty pharmacy trend rate is 13.2 percent, up from 12.4 percent one year ago. Aon Consulting points to the sluggish rate of drug adoption across the board, compounded by the FDA's reduced rate of drug approvals - especially for new molecular entities and biologic products - as the contributing factors leading to this decline.
In addition, health care rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans, down from 7.3 percent and 7.7 percent, respectively, one year ago.
See the Health Care Trends Survey.
