Health Plan Costs Increases Under 10%

April 5, 2012 ( - Costs for all types of medical plans are expected to increase by 9.9% for 2012, according to a survey by Buck Consultants.

This is the first time since 2001 that Buck’s survey has projected cost increases less than 10% for any type of plan. The firm has been conducting its survey since 1999. 

In its 24th “National Health Care Trend Survey,” Buck found costs are projected to increase at rates that are more than a full percentage point lower than its prior survey.

Type of Plan: Preferred Provider Organization (PPO)
24th Survey: 9.9%
23rd Survey: 11.2%

Type of Plan: Point-of-service (POS)
24th Survey: 9.9%
23rd Survey: 11.0%

Type of Plan: Health Maintenance Organization (HMO)
24th Survey: 9.9%
23rd Survey: 11.0%

Type of Plan: High Deductible Health Plan (HDHP)
24th Survey: 9.9%
23rd Survey: 11.1%

“The reduced trend factors reported in our survey reflect that health insurers, who may have previously added margins to account for health care reform benefit changes mandated for 2011, have now removed those margins for 2012 projections,” said Daniel Levin, FSA, a Buck principal and consulting actuary who directed the survey. “The reduction also reflects lower expected costs as a result of the economic slowdown. Employees are trying to reduce their out-of-pocket expenses and are postponing elective medical services.”

Health insurers reported an average prescription drug trend of 9.6%. This is down 1.1% from the prior survey. It is also more than twice the 4.6% reported by pharmacy benefit managers (PBMs)—third-party administrators of prescription drug programs who generally do not take any underwriting risk.

For plans that supplement Medicare, health insurers reported a projected increase of 5.8% excluding prescription drug coverage, up from 5.3% 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.

“Despite the lower trend factors found in our survey, health care costs continue to outpace both general inflation and wage increases—creating real business challenges for organizations,” said Levin. “We’ve seen increased interest from plan sponsors for strategies to optimize alternative delivery systems such as exchange models and Accountable Care Organizations.”

In a national survey of 129 insurers and administrators, Buck measured the projected average annual increase in employer-provided health care benefit costs. Insurers and administrators providing medical trends for the survey cover a total of approximately 109 million people.

Buck’s 24th “National Health Care Trend Survey” is available for $100 from Buck’s Global Survey Resources, 50 Fremont Street, 12th Floor, San Francisco, CA 94105; or call 800-887-0509. It also can be ordered online at