Aon: Health Care Seeing Double-Digit Increase In 2004

July 7, 2003 (PLANSPONSOR.com) - Health care plans across the board continue to outpace inflation at monumental rates, as double-digit rate increases are no longer uncommon among all plan types.

Where in the past, it was common to see a big disparity among the rates of different health are plans – particularly between PPO and Indemnity rates compared to HMO and POS rates – in 2004, increases varied little by plan type, according to Aon Consulting’s Spring 2003 Health Care Trend Survey. Overall, health plan rates, including prescription coverage, will increase:

  • 17.2% for Indemnity plans
  • 16.4% for HMOs
  • 16.1% for POS
  • 15.7% for PPOs.

Pharmacy plans alone are expected to be 17.7% higher in 2004 and, when prescription coverage in health care plans is not included, very similar trends are forecast:

  • 16.4% for Indemnity plans
  • 14.7% for HMOs
  • 14.5% for POS
  • 14.4% for PPOs.

These double-digit health care increases are approximately eight times the annual general inflation rate of 2.1% most recently reported by the Bureau of Labor Statistics. However, slightly lower are increases forecast for dental and vision plans:

  • 7.6% for Indemnity dental plans
  • 7.6% for PPO dental plans
  • 4.8% for DHMO plans
  • 3.8% for vision plans.

“This will be the fifth year of double-digit increases in health care costs. Faced with rising expenses, we expect companies to increase co-pays and premiums for employees. In addition, we expect employers to continue to explore a range of new options such as consumer-driven health plans, disease management programs, tiered hospital networks, pharmacy coalitions, health promotion incentives and others,” said Bill Sharon, senior vice president in the Tampa office of Aon Consulting’s health & welfare practice.

Additionally, Sharon predicts “companies will, in the coming months, need to make some serious decisions about the design of the health plans they intend to offer their employees in 2004.”

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