Costs for the most popular types of health care coverage are projected to increase at double-digit rates in 2007, according to a national survey of insurers and administrators.
by Site Staff
April 19, 2007
New York — April 19
Costs for the most popular types of health care coverage are projected to increase at double-digit rates in 2007, according to a national survey of insurers and administrators.
The survey released by Buck Consultants, an ACS company and human resource and benefits consulting firm, analyzed responses of more than 70 health insurers, HMOs and third-party administrators.
In its 17th National Health Care Trend Survey, Buck Consultants measured the projected average annual increase in employer-provided health care benefit costs.
Insurers providing medical trends for the survey cover a total of about 50 million people.
As the data below indicate, costs for the most popular plans continue to increase by more than 10 percent, similar to trends reported in Buck’s previous survey, conducted in July 2006.
Type of Plan: Preferred Provider Organization (PPO)
- 17th survey: 10.6 percent
- 16th survey: 10.9 percent
- Difference: -0.3 percent
Type of Plan: Point-of-service (POS)
- 17th survey: 10.6 percent
- 16th survey: 10.8 percent
- Difference: -0.2 percent
Type of Plan: Health Maintenance Organization (HMO)
- 17th survey: 11.1 percent
- 16th survey: 10.8 percent
- Difference: +0.3 percent
Type of Plan: High Deductible Consumer Driven
- 17th survey: 11.1 percent
- 16th survey: 11 percent
- Difference: +0.1 percent
Health insurers reported an average prescription drug trend of 11.3 percent, down 0.1 percent from 11.4 percent reported in the prior survey.
This is considerably higher than the 5.2 percent reported by pharmacy benefit managers (who generally do not take any underwriting risk).
“Employers need to consider all available strategies for controlling their health care costs,” said Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey. “Many of our clients have had success through consumer-driven health care plans, care management programs and vendor audits and management.”
Health insurers use trend factors by coverage — such as medical, prescription drugs, dental and vision care — to calculate their premium rates, and large self-funded employers use these trend factors to budget their future health care costs.
In general, trend factors provide for price increases that might result from such variables as inflation, utilization of services, technology, changes in the mix of services and mandated benefits.
Trend factors for Medicare supplement, dental and vision coverage are also included in Buck’s survey.