2010 Segal Health Plan Cost Trend Survey

Abstract

According to forecasts by managed care organizations, health insurers, pharmacy benefit managers and third party administrators that participated in the 2010 Segal Health Plan Cost Trend Survey, 2010 medical plan cost trends will be more than four times greater than the annual increase in average hourly earnings and will stand in sharp contrast to changes in the consumer price index for all urban consumers (CPI-U), which have been relatively flat or negative over the past 12 months.

Trend is a forecast of per capita claims cost that takes into account various factors, such as price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology. Changes in the costs to plan sponsors can be different from projected claims cost trends, reflecting such diverse factors as group demographics and changes in plan design and participant contributions.

The findings of the 2010 Segal Health Plan Cost Trend Survey include the following:

  • Projected prescription drug trends, which remain under 10 percent for the second consecutive year, continue to decline.
  •  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. In contrast, high-deductible health plans are projected to increase by just over one percentage point to 11.9 percent.
  • Forecasted Medicare medical plan trend rates for retirees age 65 and older are expected to increase, but are still projected to be lower than comparable medical plan trend rates for active participants and early retirees.
  • The lowest trend rates are expected in the Midwest, and the highest trend rates are expected in the Northeast for preferred provider organizations and point-of-service plans combined.
  • Inpatient hospital claim trend rates are expected to exceed both prescription drug and physician services claim trends in 2010.
  • For 2010, dental indemnity plans and dental provider organization plans are expected to decrease over 2009 trend levels.

The 2010 Segal Health Plan Cost Trend Survey examines trend ranges, trends for active participants and retirees, trend components and the accuracy of trend projections by comparing projected trends for 2008 to actual trends for that year.

The report also discusses strategies for managing health care costs and notes major marketplace issues for 2010 that plan sponsors may want to consider, including determining the impact of the Mental Health Parity and Addiction Equity Act of 2008 and preparing for the possibility of national health care reform.

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