Aon Predicts a Dip in Health Care Cost Increases

November 15, 2006 ( - Heatlh care costs are expected to increase 11% in the next 12 months - the smallest rise in five years - according to Aon Consulting's Fall 2006 Health Care Trends Survey.

In a press release on the survey results, Aon said the survey of more than 90 health insurers found Preferred Provider Organization (PPO) plans are expected to post the greatest rise in cost by 11.6%, followed closely by Health Maintenance Organization (HMO) plans (11.4%) and Point-of-Service (POS) plans (11.2%). These next-year estimates are below last year’s predictions, which all hovered around 13%.

Consumer-driven health plan (CDH) costs are expected to increase by 10.5%, a 2% decrease from the year before, the release said. “The CDH trend rate decrease has been particularly satisfying,” said Bill Sharon, senior vice president with Aon and director of the study, in the press release. “After six years of CDH there is now enough credible financial information about these plans to show that they can be an effective approach to controlling healthcare costs.” Aon Consulting defines trend as the expected future increase in employer-provided medical plan claims cost, before any plan changes.

Sharon offered several reasons for the lower predictions:

  • Health care insurers are aggressively controlling hospital, physician and pharmacy increases;
  • Employers are introducing higher deductibles, co-insurance and co-pays, which have slowed the utilization of health care services;
  • Employers are implementing health promotion programs to improve employee lifestyles; and
  • Employers and health care insurers are adding chronic condition management programs to more effectively manage the high costs of chronic conditions.

Other survey findings included:

  • Medicare Supplement plan trends are predicted to increase by 10.5% and Medicare Advantage plans trends will likely increase by 10.1%.
  • General pharmacy costs are expected to increase by 10.6%, down from 11.8% one year ago.
  • Specialty drug costs will increase by 14.9%, down from 19% at the same time last year.

For more information, contact Sara Carlson at 312-381-5045 or .