2007 Segal Health Plan Cost Trend Survey

Abstract

The Segal Company's tenth annual survey of managed care organizations (MCOs), health insurers, pharmacy benefit managers (PBMs) and third party administrators (TPAs)  forecasts continued declines in trends for 2007. Despite this projected deceleration, medical and prescription drug plan costs are expected to outpace general inflation and wage increases significantly.

The following are some of the notable findings from this year's survey:

  • All medical plan types are forecasted to see cost increases in 2007 that are more than twice the consumer price index and the annual increase in real average weekly earnings.
  • For the first time in several years, trends for prescription drug coverage are projected to decelerate in 2007 to levels that are close to trends for medical coverage.
  • Compared to trend rates for retail prescription drug coverage, prescription drug mail order trend rates are projected to decrease at least three percentage points for both actives and retirees in 2007.
  • Very similar 2007 trend rates are forecasted for preferred provider organizations (PPOs) and health maintenance organizations (HMOs): 11.6 percent and 11.1 percent, respectively. However, projected increases for high-deductible PPOs are expected to be higher: 12.0 percent.
  • The survey found some slight regional variances that suggest regional providers pay be able to negotiate deeper discounts in their local markets than can national providers.

The report of results of the 2007 Segal Health Plan Cost Trend Survey includes four tables of data and seven graphs. It also examines the accuracy of trend projections. The report concludes by discussing a three-pronged strategy for managing health care costs.

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