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New study projects health-care costs to increase more slowly

By Journal Staff

Date:

Projected cost increases for all types of medical plans are expected to be down by between 0.1 percent and 0.5 percent in 2014, according to the 28th National Health Care Trend Survey by Buck Consultants, a unit of Xerox (NYSE: XRX). 

This continues the trend of slower increases since 2010, the survey found. Still, cost increases are topping 8.5 percent across the major health-plan types. 

In a national survey of 126 insurers and administrators, Buck measured the projected average annual increase in employer-provided health-care benefit costs. Insurers and administrators providing medical trends for the survey cover a total of about 119 million people.

Type of Plan: Preferred-provider organization (PPO)
28th Survey: 8.7 percent
27th Survey: 9.0 percent
26th Survey: 9.2 percent

Type of Plan: Point-of-service (POS)
28th Survey: 8.5 percent
27th Survey: 8.8 percent
26th Survey: 9.0 percent

Type of Plan: Health-maintenance organization (HMO)
28th Survey: 8.6 percent
27th Survey: 8.7 percent
26th Survey: 8.8 percent

Type of Plan: High-deductible health plan (HDHP)
28th Survey: 8.6 percent
27th Survey: 9.1 percent
26th Survey: 9.1 percent:

Some survey respondents cited reduced utilization as the primary reason for the decrease. 

“This may be a result of the economic slowdown and its impact on consumers’ willingness to seek medical treatment,” Harvey Sobel, a Buck principal and consulting actuary who co-authored the survey, said in a news release. “Even though the decline is good news, most plan sponsors still find 8-9 percent cost increases unsustainable.”

Health insurers reported an average prescription-drug cost increase of 9.2 percent, a decrease of 0.7 percent from the prior survey. On the other hand, pharmacy benefit managers, who generally do not take any underwriting risk, reported a weighted average increase of 4.1 percent — less than half of the rise reported by health insurers — but still up by 0.3 percent from the 3.8 percent reported in the prior survey.

For plans that supplement Medicare, health insurers reported an average cost increase of 5.5 percent excluding prescription drug coverage, up from 4.1 percent in the prior survey, Buck says. Medicare Supplement plans generally have lower cost increases than other medical plans due to the effect of federal controls on Medicare fees and the smaller increases expected in Medicare deductibles and copays, according to Buck.

The survey also reported cost-increase trends for dental and vision plans.
“It’s too soon to tell the impact of public and private health exchanges on [costs],” said Daniel Levin, a Buck principal and consulting actuary, who co-authored the survey.

“It may take another few years before we really know if (and by how much) the exchanges will “bend” the cost curve.”

Buck Consultants, founded in 1916, is a human resources and benefits consulting firm with more than 1,500 professionals worldwide. 

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