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2002 Segal Health Plan Cost Trend Survey (published in October 2001)
Abstract
According to the 2002 Segal Health Plan Cost Trend Survey, health plan costs are projected to escalate at a dramatic rate in 2002:
- Double-digit claims cost trends are projected for non-network fee-for-service (FFS) plans, preferred provider organizations (PPOs), point-of-service (POS) plans and health maintenance organizations (HMOs) covering active participants and retirees under age 65, as well as for non-network FFS plans that cover retirees age 65 and over.
- Prescription drug benefit plan costs continue to have the highest trend rates, which are projected to increase at an annual rate of nearly 20 percent in 2002.
- Trends for 2002 traditional FFS dental plans, dental provider organizations (DPOs) and dental maintenance organizations (DMOs) are projected to increase at a more modest rate.
The following table summarizes projections for 2002:
| Medical (Actives and Retirees Under Age 65) | (without Rx) | (with Rx)* |
|---|---|---|
| Non-Network Fee-for-Service (FFS) Plans | 15.7% | 16.4% |
| Preferred Provider Organizations (PPOs) | 12.7% | 14.0% |
| Point-of-Service (POS) Plans | 12.0% | 13.5% |
| Health Maintenance Organizations (HMOs) | 11.1% | 12.8% |
| Medical (Retirees Age 65 and Older) | (without Rx) | (with Rx)* |
|---|---|---|
| Non-Network FFS Plans | 10.5% | 14.0% |
| Prescription Drug Carve-Out | Actives and Retirees Under Age 65 | Retirees Age 65 and Older |
|---|---|---|
| Retail | 19.4% | 20.5% |
| Mail Order | 18.8% | 20.5% |
| Dental Plans | |
|---|---|
| Non-Network FFS Plans | 7.5% |
| Dental Provider Organizations (DPOs) | 6.6% |
| Dental Maintenance Organizations (DMOs) | 4.7% |
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The 2002 Segal Health Plan Cost Trend Survey reports projections for 2002 obtained from a survey of major insurance carriers, pharmacy benefit managers (PBMs), third party administrators (TPAs) and managed care organizations (MCOs) nationwide. The Segal Health Plan Cost Trend Survey focuses on expected per capita claims cost increases, not the net change in costs to plan sponsors. By eliminating extraneous factors, such as changes in plan design and shifting cost to plan sponsors, The Segal Company presents an accurate forecast of health plan cost trend.
The Segal Health Plan Cost Trend Survey also reports actual per capita claims cost increases through July 2001 for select insured and self-funded health plans. The following table compares actual data for 2001 with projections for 2001 that were made in 2000:
| Medical (Actives and Retirees Under Age 65) - with Rx | 2001 Actual | 2001 Projected |
|---|---|---|
| Non-Network FFS Plans | 12.5% | 15.1% |
| PPOs | 10.4% | 12.5% |
| POS Plans | * | 11.4% |
| HMOs | 14.1% | 9.9% |
| Medical (Retirees Age 65 and Older) - with Rx | 2001 Actual | 2001 Projected |
|---|---|---|
| Non-Network FFS Plans | * | 13.4% |
| Medicare HMOs | * | 7.9% |
| Prescription Drug Carve-Out Plans (Actives and Retirees Under Age 65) | 2001 Actual | 2001 Projected |
|---|---|---|
| Retail | 15.2%** | 19.7% |
| Mail Order | 15.2%** | 19.7% |
| Prescription Drug Carve-Out Plans (Retirees Age 65 and Older) | 2001 Actual | 2001 Projected |
|---|---|---|
| Retail | 15.2%** | 20.9% |
| Mail Order | 15.2%** | 20.8% |
| Dental | 2001 Actual | 2001 Projected |
|---|---|---|
| Non-Network FFS Plans | 4.5% | 7.8% |
| DPOs | 8.6% | 6.6% |
| DMOs | 5.6% | 5.2% |
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The 2002 Segal Health Plan Cost Trend Survey features color graphs. Commentary appears alongside the findings. The report discusses the following factors that influence health plan cost trend: medical price inflation, "leveraging," cost-shifting, utilization, government-mandated benefits and other legislative changes and technology changes and their effect on the intensity of care. Segal asked insurers participating in the 2002 survey about their compliance with the DOL's claims and appeals regulations and how they would underwrite defined contribution health plans. The responses are illustrated in pie charts.
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