October 3, 2012 (PLANSPONSOR.com) – Health benefit plan cost trend rates for 2013 are expected to decline to the lowest level in 11 years of forecasts, according to the 2013 Segal Health Plan Cost Trend Survey.
The Segal Company's 16th annual survey of health plan cost trends found almost all medical plan types are expected to experience trend increases less than 10% (with the exception of fee-for-service/indemnity plans). All managed care cost trends are forecast to be in the single digits.
Trends for health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) plans are projected to be approximately one percentage point or more lower for 2013 than were projected for 2012. Pharmacy benefit cost trends are projected to be 6.4%, substantially below the double digit trends of a decade earlier. Trend is a forecast of per capita claims cost increases that takes into account various factors, such as price inflation, utilization, government-mandated benefits and new treatments, therapies and technology, Segal explained. Although there is usually a high correlation between a trend rate and the actual cost increase assessed by a carrier, trend and the net annual change in plan costs are not the same. Changes in the costs to plan sponsors can be significantly different from projected claims cost trends, reflecting such diverse factors as group demographics, changes in plan design, administrative fees, reinsurance premiums and changes in participant contributions.