Health-Care inflation ‘Good news’ is relative: Rate increases fall again, but still above 10% — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Health-Care inflation ‘Good news’ is relative: Rate increases fall again, but still above 10%

Get PDF file

by on
in Leaders & Managers,Management Training

While health-care costs are forecast to rise at a slower rate in the coming year, don’t get too excited: Medical plan rates will still increase at a double-digit pace, according to a new Aon Consulting survey of 70 health insurance companies.

The Aon survey projects that health-care costs will rise on average 11 percent in the next 12 months. That’s down 0.5 percentage points from last fall and more than 4 percentage points since fall 2001, when the projection was 15.6 percent increase.

Here’s the forecast increases by plan type for the upcoming 12 months.

  • HMO plans: 10.9% projected increase, down from 12.2% a year ago.
  • POS plans: 10.8% projected increase, down from 11.9%.
  • PPO plans: 11.2% projected increase, down from 12.4%.
  • Consumer-driven health plans (CDHPs): 10.7% projected increase, down from 12.5%

For prescription drugs, general pharmacy costs are expected to increase by 9.5% in the next 12 months, compared with 12.2% increases a year ago.

“Although it is encouraging to see a continuing decline in health care trend rates, employers are still challenged by the fact that health care cost increases are more than four times general inflation rates,” said Bill Sharon, Aon senior VP and director of the study. “For many businesses, health care costs continue to be their fastest growing expense.”

Main reasons for the continuing double-digit increases: increasing patient demand for services, an aging population, higher medical technology and hospital costs, increasing price and utilization of prescription drugs, poor lifestyle choices, cost shifting and medical malpractice costs.

“Fortunately, employers have a number of strategies at their disposal to reduce the rate of these increases,” Sharon explained. “Some of the more successful strategies consist of implementing consumer-driven health care plans, chronic condition management programs and health-promotion programs. Coupled with plan design changes and/or employee contribution changes, these strategies can reduce an employer’s health care cost increase by more than half.”

Leave a Comment

Previous post:

Next post: