Milliman Reports Smaller Health Insurance Premium Increases

July 30, 2008 ( - Preliminary results from Milliman's 2008 Group Health Insurance Survey indicate that while premium rate increases continue to exceed the government's official rate of inflation, they are lower than premium increases in recent years.

In a press release, Milliman said the 2009 estimated January renewal increases of 8.5% for Health Maintenance Organizations (HMOs) and 9.4% for Preferred Provider Organizations (PPOs) continue a trend toward lower increases since peaking at 16.1% in 2002.

“Potential factors contributing to the deceleration in recent rate increases include added consumer cost awareness as evidenced by higher use of generic drugs, lower utilization within HSA high deductible plans, and an economic downturn that may leave less money available for discretionary care for some people,” said Doug Proebsting, co-author of the survey report, in the announcement.

However, Proebsting also noted: “Possible contributing factors to the rise in health care costs beyond the average rate of inflation (excluding aging and benefits) include increasing consumer demand due to direct to the consumer marketing and the availability of medical information on the Internet. Rising rates of chronic conditions (like obesity, diabetes and asthma), new technology, specialty drugs, a move away from traditional managed care (such as preauthorization and closed network products), cost shifting impact from government health care programs and the uninsured, and the recent surge in building new hospitals also may contribute to the rise.”

Milliman said final survey results will be published in October and will include premium rates and trends for medical and prescription drugs, hospital inpatient cost and utilization data, physician reimbursement levels, medical expense ratios, and profit levels.

Results will be provided by metropolitan area, state, region and nationwide, and results for HMOs and PPOs will be shown separately.