Health Care Costs Will Continue to Outpace Inflation

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<p><strong>New York &mdash; April 19</strong><br />Costs for the most popular types of health care coverage are projected to increase at double-digit rates in 2007, according to a national survey of insurers and administrators. </p><p>The survey released by Buck Consultants, an ACS company and human resource and benefits consulting firm, analyzed responses of more than 70 health insurers, HMOs and third-party administrators.<br /><br />In its 17th National Health Care Trend Survey, Buck Consultants measured the projected average annual increase in employer-provided health care benefit costs. </p><p>Insurers providing medical trends for the survey cover a total of about 50 million people.<br /><br />As the data below indicate, costs for the most popular plans continue to increase by more than 10 percent, similar to trends reported in Buck&rsquo;s previous survey, conducted in July 2006.<br /><br /><strong>Type of Plan: Preferred Provider Organization (PPO)</strong></p><ul><li>17th survey: 10.6 percent </li><li>16th survey: 10.9 percent</li><li>Difference: -0.3 percent</li></ul><p><br /><strong>Type of Plan: Point-of-service (POS)</strong></p><ul><li>17th survey: 10.6 percent</li><li>16th survey: 10.8 percent </li><li>Difference: -0.2 percent </li></ul><p><br /><strong>Type of Plan: Health Maintenance Organization (HMO)</strong></p><ul><li>17th survey: 11.1 percent</li><li>16th survey: 10.8 percent</li><li>Difference: +0.3 percent<br /></li></ul><p><strong>Type of Plan: High Deductible Consumer Driven</strong></p><ul><li>17th survey: 11.1 percent </li><li>16th survey: 11 percent<br /></li><li>Difference: +0.1 percent</li></ul><p>Health insurers reported an average prescription drug trend of 11.3 percent, down 0.1 percent from 11.4 percent reported in the prior survey.&nbsp; </p><p>This is considerably higher than the 5.2 percent reported by pharmacy benefit managers (who generally do not take any underwriting risk).</p><p>&ldquo;Employers need to consider all available strategies for controlling their health care costs,&rdquo; said Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey. &ldquo;Many of our clients have had success through consumer-driven health care plans, care management programs and vendor audits and management.&rdquo;<br /><br />Health insurers use trend factors by coverage &mdash; such as medical, prescription drugs, dental and vision care &mdash; to calculate their premium rates, and large self-funded employers use these trend factors to budget their future health care costs.&nbsp; </p><p>In general, trend factors provide for price increases that might result from such variables as inflation, utilization of services, technology, changes in the mix of services and mandated benefits.<br /><br />Trend factors for Medicare supplement, dental and vision coverage are also included in Buck&rsquo;s survey.</p>

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