Segal Puts 2010 Health Cost Hikes at 10.2% to 10.8%

September 24, 2008 ( - A new Segal Company estimate indicates that health care cost increases for most managed care plans are expected to rise from 10.2% to 10.8% next year.

A Segal news release said almost one-third (32%) of respondents to its survey of health care service providers projected open-access PPO trend rates in the range of under 10% for 2010, more than the 29% who said so in 2009. None of the survey respondents forecasted trend rates higher than 15%-19.9% for 2010.

As reported in 2009, over half of survey respondents (57% in 2010 and 54% in 2009) reported projected prescription drug trend ranges of less than 10%. In addition, no respondents reported projected prescription drug trend rates of 15% or more for 2010, compared to 38% of respondents forecasting 15% or greater trend rates four years ago, Segal indicated.

High-deductible health plans’ projected increase is just over one percentage point higher than in 2009 at 11.9% next year, while inpatient hospital claim trend rates are expected to top both prescription drug and physician services claim trends in 2010, Segal said.

Projected prescription drug trends remain under 10% for the second consecutive year, continuing to drop from a high of 19.7% in 2001.

The survey also found regional variation among projected trend rates for preferred provider organizations and point-of-service plans combined: the lowest trend rates are expected in the Midwest (9.5%) and the highest in the Northeast (10.9%).

As reported for both 2008 and 2009, price inflation for services and supplies continues to be the biggest element of overall medical plan trend in 2010. Trends in utilization rates are expected to increase compared to 2009 for both hospital and physician services with utilization representing the largest component of trend for physician services.

Price inflation is driving medical trend at a rate of 6.1% for PPO plans and 5.8% for HMO plans in 2010.

Dental indemnity plans and dental provider organization (DPO) plan trends are expected to decrease over 2009 trend levels. Conversely, trend rates for fixed scheduled plans and dental maintenance organization (DMO) plans are both forecasted to go up.

Segal said health cost hikes continue to put major pressure on plan sponsors, who are accelerating their efforts to control health care costs through renewed wellness and disease management programs, changes to value-based plan designs, eligibility audits, seeking more competitive vendor terms through bids, and other strategies.

"Utilizing the above strategies can lessen health plan costs in the long run," Segal wrote. "Plan sponsors that play an active role in familiarizing themselves with current marketplace issues will be better prepared for the challenges and opportunities that lay ahead."

In May and June 2009, The Segal Company surveyed 80 health insurers, managed care organizations, pharmacy benefit managers, and third-party administrators.

The full survey report is available here .