2010 Health Plan Costs More Than Four Times Wage Increases
According to The Segal Company's just-completed survey of projected 2010 health plan costs, medical plan cost trends will continue to be more than four times greater than the annual increase in average hourly earnings and in sharp contrast to changes in the consumer price index for urban consumers.
Other key findings of the survey include:
- High-deductible health plans are projected to increase by just over one percentage point to 11.9 percent next year.
- In 2010, medical plan projections for most managed care plans are similar to those found in 2009, ranging from 10.2 percent to 10.8 percent.
- Inpatient hospital claim trend rates are expected to exceed both prescription drug and physician services claim trends in 2010.
- The survey 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 percent) and the highest in the Northeast (10.9 percent).
- Projected prescription drug trends, which remain under ten percent for the second consecutive year, continue to decline from a high of 19.7 percent in 2001.
- 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. Utilization will represent the largest component of trend for physician services.
- Health plan cost trends continue to put major pressure on plan sponsors, who are not waiting for health care reform. They 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 innovative strategies.
In May and June 2009, The Segal Company surveyed 80 health insurers, managed care organizations, pharmacy benefit managers and third-party administrators for the trend factors they will be applying to actual medical claims to predict expected claims for 2010. Trend is a forecast of claims cost that takes into account price inflation, utilization, government-mandated benefits and new treatments, therapies and technology.
Claims trends reflect charges by doctors, hospitals, labs and other medical providers to self-insured health plan sponsors, insurance carriers, third-party administrators and managed care organizations. Claims are the raw costs of health care that plan sponsors have to deal with directly or indirectly, and per capita claims trends are a major concern for most plan sponsors. Changes in the actual costs to plan sponsors can be significantly different from projected claims cost trends because of group demographics, changes in plan design and participant contributions, or other factors.
To access the full 2010 Segal Health Plan Cost Trend Survey, please click here.