Buck Reports Improved Health Plan Cost Increases

December 17, 2012 (PLANSPONSOR.com) Projected cost increases for all types of medical plans are anticipated to be down by between 0.2% and 0.6% through the first half of 2013, according to a survey.

This year is the first time since 2001 that Buck Consultant’s survey indicated projected cost increases less than 10% for any plan type, a trend that will continue into 2013.  

The survey found a projected cost increase for Preferred Provider Organization (PPO) plans of 9.7% compared to 9.9% last year. For Point-of-Service (POS) plans, the projected cost increase is 9.5%, down from 9.9%.

Health Maintenance Organization (HMO) plans are projected to see a cost increase of 9.3%, and High Deductible Health Plans (HDHP) 9.6%, both down from 9.9% last year.

“Despite the lower trend, though, health care costs continue to outpace general inflationcreating difficult business decisions for organizations,” said Daniel Levin, FSA, a Buck principal and consulting actuary who directed the survey.

Health insurers reported an average prescription drug trend of 10.1%, an increase of 0.5% from the prior survey. It is also more than twice the 4.1% reported by pharmacy benefit managers (PBMs)third-party administrators of prescription drug programs, who generally do not take any underwriting risk. The continued shift to generic drug use is a significant factor in the reduced drug trends shown by PBMs.

For plans that supplement Medicare, health insurers reported a trend of 5.4% excluding prescription drug coverage, down from 5.8% in the prior survey. This lower trend of Medicare Supplement plans reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and co-pays.

“Another health care trend we’ll be watching is the impact of private health insurance exchanges,” said Levin. “It remains to be seen how the development of private exchanges will affect the use of public exchange models, but it could likely impact the projected cost trends we measure in this survey.”

The survey also reported trend factors for dental and vision plans.

Buck’s 25th “National Health Care Trend Survey” is available for $100 by calling 1-800-887-0509 or visiting www.bucksurveys.com.