Predicted Declines in Health Care Claims Costs for 2006

August 5, 2005 ( - The 2006 Segal Health Plan Cost Trend Survey forecasts declines in trends for 2006.

Segal defines trend as the forecast change in health plans’ per-capita claims cost determined by insurance carriers, managed care organizations, and third party administrators.

Key findings of the survey noted in a Segal press release include:

  • 2006 will mark the third consecutive year of lower projected trend rates for medical plans. Still, medical plan trend rates are three to four times the rate of general inflation.
  • Projected prescription drug trends have declined by about 6 percentage points, after peaking at 19.7% in 2001, to levels that are closer to medical coverage. However, the projected trend for biotechnology or specialty drugs is increasing at a rapid rate: 21.6% in 2006, approximately 8 percentage points above aggregate retail trend.
  • Trend rates for hospital and physician services are expected to fall across the board, except for trend rates for physician services in the HMO environment, which are projected to remain at the same level in 2006 as 2005 projections: 10.2%.
  • Along with increases in prescription drug coverage, increases in the cost of hospital services are a leading contributor of overall medical plan inflation.
  • Actual trends experienced in 2004 were significantly lower than the trends for that year projected by national and regional insurers, managed care organizations, pharmacy benefit managers and third party providers.

The survey found that health care costs will continue to grow faster than workers’ pay and will continue to place a burden on plan sponsors. Segal notes that, with average per-participant costs (before cost sharing) of $7,600, a 12% cost increase equals $900 per participant in 2006. Other than cost sharing, sponsors look to plan design, vendor management, and individual health management to control their healthcare benefits costs.

The complete survey report can be found here .