Segal Issues its Annual Health Plan Cost Trend Survey

October 10, 2013 ( – The 2014 Segal Health Plan Cost Trend Survey found the slowest growth in 14 years of forecasts.

Health benefit cost trend rates show the slowest growth in 14 years, according to the survey.

“Overall health plan costs are still on the rise,” said Edward A. Kaplan, senior vice president and Segal’s national health practice leader, even though noting that medical and prescription drug trends are expected to decelerate in 2014. Plan sponsors are responding by developing more progressive and creative efforts to manage the costs of high-quality health care, he said.

All medical plan types are projected to experience trend rate declines in 2014, the survey found. Prescription drug benefit trends for retail and mail order, combined, fell slightly from 6.4% this year to 6.3% for active participants and early retirees. Health maintenance organization (HMO) trend rate projections for 2014 (7.0%) are down 0.9% from this year’s 7.9%. Nearly two-thirds of respondents predicted health benefit costs will increase 1% or less following the loss of “grandfathered” status under the Patient Protection and Affordable Care Act (PPACA). 

“Plan sponsors must be ready to implement new requirements introduced by the Affordable Care Act and to determine their impact on plan costs,” Kaplan said. “We have also estimated that the total additional costs to group health plan sponsors to comply with all mandates, fees and new taxes imposed under ACA could be as much as 4%.”

Segal advises plan sponsors to:

  • Review plan participant premium contribution strategies to align with provisions under the PPACA;
  • Utilize patient-centered medical homes (PCMH) and Accountable Care Organizations (ACOs), which focus on primary and preventative care;
  • Explore ways to move providers to outcome-based compensation;
  • Introduce participants to decision tools that provide more information on health treatment costs; and
  • Encourage participants to seek care for minor illnesses at lower-cost settings, such as walk-in clinics.

The complete survey results are available here.