Survey: Major health-care plans’ costs to rise in lockstep

Different types of employer-provided health-insurance plans will increase in cost at virtually identical rates in 2012, according to a recent national survey from Buck Consultants, LLC. 

The National Health Care Trend Survey 2012, which the human-resources and benefits consulting firm Buck Consultants released April 5, projected that preferred-provider organization plans (PPO), point-of-service plans (POS), health-maintenance organization plans (HMO), and high-deductible health plans (HDHP) will all increase in cost by nearly 10 percent this year.

Insurers use the cost-increase projections, or “trend factors,” to help calculate premium rates, according to Buck Consultants. The projections are not the same as planned premium increases, but they generally reflect pressures such as inflation, utilization of services, technology, mandated benefits, and changes in services.

This year’s survey shows that insurers are placing less emphasis on plan type when projecting cost increases, according to Daniel Levin, a principal in Buck Consultants’ health and productivity practice and a consulting actuary who directed the survey.

“Insurers see these as names of networks and not a delivery model,” he says. “They don’t feel confident that the differences are large enough to warrant using different trends.”

Buck Consultants recorded responses from 129 insurers and administrators for the survey, measuring their projected average annual increase in employer-provided health-care benefit costs. Survey respondents cover a total of about 109 million people, according to the consulting firm.

Health insurers operating in Central New York that responded to the survey include Aetna, UnitedHealthcare, and Excellus BlueCross BlueShield, the region’s largest health insurer. However, the survey did not include a regional breakdown of data.

The 9.9-percent cost increase projected across plan types in 2012 is lower than increases predicted in previous years.

In 2011, survey respondents predicted an 11.2-percent rise in medical PPO costs. They projected an 11-percent jump in medical POS costs.

Last year’s survey showed that insurers expected medical HMO costs to rise by 11 percent. And they predicted HDHP costs would increase by 11.1 percent in 2011.

Several factors may have helped hold down projected cost increases in 2012, according to the survey. They include consumers spending less on health care because of continued economic difficulties and insurers having a better grasp on anticipated costs caused by federal health-care reform mandates.

In addition, wellness programs and preventive care may be helping to hold down costs, according to Levin.

Prescription drug, dental, and vision trends

The Buck Consultants survey also looked at cost trends for prescription drugs, dental insurance, and vision insurance.

Health insurers projected a 9.6-percent increase in prescription-drug costs in 2012. That’s down from 10.7 percent in last year’s survey.

Pharmacy-benefit managers, which act as administrators for self-insured plans and insurance companies, predicted cost increases of just 4.6 percent in 2012, down from 6.1 percent in 2011.

Generics are probably causing the slowdown in projected drug costs, Levin says.

“We thought 10, 15 years ago, if you could get to 60 percent generic utilization, that is terrific,” he says. “Now we’re telling our clients at 71 percent that they can do better. They can get to 80 percent generic utilization.”

Insurers anticipate dental HMO costs will climb 4.9 percent in 2012, the survey found, on par with last year’s projected increase of 5 percent. They believe dental PPO costs will rise 5.6 percent, which is also in line with last year, when insurers predicted a 5.7 percent increase.

Survey respondents said that costs for scheduled vision services will rise by 2 percent in 2012, the same increase predicted in 2011. They expect other vision costs to climb by 3 percent, also identical to last year’s projections.

Buck Consultants employs more than 1,500 people worldwide. The consulting company is a subsidiary of Norwalk, Conn.–based Xerox (NYSE: XRX).                      

Different types of employer-provided health-insurance plans will increase in cost at virtually identical rates in 2012, according to a recent national survey from Buck Consultants, LLC. 

The National Health Care Trend Survey 2012, which the human-resources and benefits consulting firm Buck Consultants released April 5, projected that preferred-provider organization plans (PPO), point-of-service plans (POS), health-maintenance organization plans (HMO), and high-deductible health plans (HDHP) will all increase in cost by nearly 10 percent this year.

Insurers use the cost-increase projections, or “trend factors,” to help calculate premium rates, according to Buck Consultants. The projections are not the same as planned premium increases, but they generally reflect pressures such as inflation, utilization of services, technology, mandated benefits, and changes in services.

This year’s survey shows that insurers are placing less emphasis on plan type when projecting cost increases, according to Daniel Levin, a principal in Buck Consultants’ health and productivity practice and a consulting actuary who directed the survey.

“Insurers see these as names of networks and not a delivery model,” he says. “They don’t feel confident that the differences are large enough to warrant using different trends.”

Buck Consultants recorded responses from 129 insurers and administrators for the survey, measuring their projected average annual increase in employer-provided health-care benefit costs. Survey respondents cover a total of about 109 million people, according to the consulting firm.

Health insurers operating in Central New York that responded to the survey include Aetna, UnitedHealthcare, and Excellus BlueCross BlueShield, the region’s largest health insurer. However, the survey did not include a regional breakdown of data.

The 9.9-percent cost increase projected across plan types in 2012 is lower than increases predicted in previous years.

In 2011, survey respondents predicted an 11.2-percent rise in medical PPO costs. They projected an 11-percent jump in medical POS costs.

Last year’s survey showed that insurers expected medical HMO costs to rise by 11 percent. And they predicted HDHP costs would increase by 11.1 percent in 2011.

Several factors may have helped hold down projected cost increases in 2012, according to the survey. They include consumers spending less on health care because of continued economic difficulties and insurers having a better grasp on anticipated costs caused by federal health-care reform mandates.

In addition, wellness programs and preventive care may be helping to hold down costs, according to Levin.

Prescription drug, dental, and vision trends

The Buck Consultants survey also looked at cost trends for prescription drugs, dental insurance, and vision insurance.

Health insurers projected a 9.6-percent increase in prescription-drug costs in 2012. That’s down from 10.7 percent in last year’s survey.

Pharmacy-benefit managers, which act as administrators for self-insured plans and insurance companies, predicted cost increases of just 4.6 percent in 2012, down from 6.1 percent in 2011.

Generics are probably causing the slowdown in projected drug costs, Levin says.

“We thought 10, 15 years ago, if you could get to 60 percent generic utilization, that is terrific,” he says. “Now we’re telling our clients at 71 percent that they can do better. They can get to 80 percent generic utilization.”

Insurers anticipate dental HMO costs will climb 4.9 percent in 2012, the survey found, on par with last year’s projected increase of 5 percent. They believe dental PPO costs will rise 5.6 percent, which is also in line with last year, when insurers predicted a 5.7 percent increase.

Survey respondents said that costs for scheduled vision services will rise by 2 percent in 2012, the same increase predicted in 2011. They expect other vision costs to climb by 3 percent, also identical to last year’s projections.

Buck Consultants employs more than 1,500 people worldwide. The consulting company is a subsidiary of Norwalk, Conn.–based Xerox (NYSE: XRX).