Health care costs projected to increase less than 10% (from Employee Benefit News)

Read the original article here.

Cost increases for health care are perhaps finally slowing down, with employer health benefit expenditures not expected to increase in 2012 at the same explosive growth in recent years. Costs for all types of medical plans are expected to increase by 9.9% for 2012, according to a survey by Buck Consultants, the first time since 2001 that Buck’s survey has projected cost increases less than 10% for any type of plan. The firm has been conducting its survey since 1999.

In a national survey of 129 insurers and administrators, Buck measured the projected average annual increase in employer-provided health care benefit costs. Insurers and administrators providing medical trends for the survey cover a total of approximately 109 million people.

“The reduced trend factors reported in our survey reflect that health insurers, who may have previously added margins to account for health care reform benefit changes mandated for 2011, have now removed those margins for 2012 projections,” says Daniel Levin, a Buck principal and consulting actuary who directed the survey.  “The reduction also reflects lower expected costs as a result of the economic slowdown. Employees are trying to reduce their out-of-pocket expenses and are postponing elective medical services.”

Health insurers reported an average prescription drug trend of 9.6%. This is down 1.1% from the prior survey. It is also more than twice the 4.6% reported by pharmacy benefit managers.

“Despite the lower trend factors found in our survey, health care costs continue to outpace both general inflation and wage increases — creating real business challenges for organizations,” says Levin. “We’ve seen increased interest from plan sponsors for strategies to optimize alternative delivery systems such as exchange models and Accountable Care Organizations.”

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Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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