Human Capital & Careers

Seven-Year Low in Heath-Cost Growth Seen

Employers should enjoy the fruits of a continuing drop in HMO and PPO premium rises in their January coverage renewals.
Stephen TaubJuly 19, 2006

By year’s end, health care costs will have recorded their slowest annual rate of growth in seven years, the authors of a widely followed survey predict.

According to preliminary results from Milliman’s annual Group Health Insurance Survey, 2007 estimated January renewal increases are poised to come in at 9.7 percent for Health Maintenance Organizations (HMOs). That is 0.9 percent lower than last year’s survey result of 10.6 percent, and down 7 percent from four years ago.

Preliminary results for Preferred Provider Organizations (PPOs) will record a 2007 renewal rate increase of 10.7 percent, the actuarial firm forecast. That works out to 1 percent lower than last year.

This is the fourth year in a row in which the rate of increase has declined, according to Milliman, which has been conducting the survey for 15 years. It is the third year for which the firm has surveyed PPOs and the fourth year it has looked at consumer driven health (CDH) products.

The survey was sent to the nation’s HMOs and fully insured PPOs serving the commercial large and mid-group employer market. Stressing that the results are preliminary, the firm notes that every year about 40 percent of all eligible insurers take part in its study. Final results will be published in October.

One form of health-care benefit plans should enjoy a special surge. “Look for the 2006 survey to report a continuing shift to CDH products,” predicts Doug Proebsting, co-author of this year’s survey, in a press release. The 2005 survey reported that insurers were offering such products—which generally feature high deductibles and employee savings accounts—in nearly all of their employer markets, he noted.