Buck Finds No Cure in Sight for Healthcare Costs

December 18, 2002 (PLANSPONSOR.com) - There's apparently no respite in sight for employer healthcare costs, according to a new report from Buck Consultants.

Employers’ health care costs will continue to increase at a double-digit pace in 2003, according to the results of a national survey of nearly 100 health insurers, HMOs and third- party administrators by Buck Consultants.   The ninth National Health Care Trend Survey, conducted in October and November, found that the costs of the most popular healthcare plans are now projected to be even higher than they were just six months ago, specifically:

  • Preferred provider organization (PPO) now expected to rise 15.0%, versus 14.8% in the prior survey
  • Point-of-service (POS) plans now expected to increase 14.8%, compared with the 14.6% previously projected
  • Health Maintenance Organization (HMO) now looking at a 13.8% increase, identical to the projection from June/July 2002

Although down slightly from the prior survey (see  Report Foresees Steep Healthcare Increases ), the most recent survey indicated costs for providing prescription drug card programs will continue to outpace those for other types of medical services.  

Pharmacy benefit manager programs are looking at a 15.0% increase, down from the 15.9% projected in the prior survey.   Meanwhile, insurer programs are now anticipating a 20.3% rise, somewhat lower than the 20.6% previously reported.   Combined, employers are looking at a 16.4% increase, compared with a 16.9% rise from the prior survey.

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, according to Buck. In general, trend factors provide for price increases that may result from such variables as inflation, utilization of services, technology, changes in the mix of services and mandated benefits.