Insurers Estimate Health Reform to Increase 2011 Costs by 2%

August 16, 2010 ( – A Segal Company health insurer poll found 22% of respondents estimated that complying with the new health reform law will add more than 2% to costs next year.

A Segal news release said its poll of insurers, HMOs and third-party health plan administrators found no respondents estimated that the cost to comply with health reform will be zero.  Some 76% estimated that raising dependent child eligibility to age 26 will increase costs between 0.1% and 1% for 2011 (see “In” Dependents).

Meanwhile, 71% said that cutbacks in payments by CMS to Medicare providers will increase costs to private plan sponsors, but they could not quantify the impact on health plans.

“We have priced out several cases where raising the dependent age to 26 could add 3% to 4% in new costs in 2011, which suggests that the average forecast noted in our survey may not be appropriate in all cases,” said Edward Kaplan, Segal’s senior vice president and national health practice leader, in the news release. “Potential cost increases could vary dramatically among plan sponsors. As a result, plan sponsors should evaluate group-specific demographics and experience before relying solely on insurer estimates of future costs.”

The organizations polled cover approximately 80% of employees enrolled in group health plans, Segal said.

A recent Mercer survey found a quarter of the 791 employers polled are looking for health care reform to tack on at least 3% in additional costs to their 2011 plan expenses and one in 10 were looking for a 5%-cost hike or more (see Employers Anticipate HCR Driven Cost Hikes).