Human Capital & Careers

Health Care Cost Rises May Temper a Bit

A survey of managed care groups, insurers, and pharmacies sees slight moderation next year from the usual double-digit climb.
Kate PlourdAugust 19, 2008

It’s far from the leveling out of health-care costs that most companies seek. But one new survey of 70 managed care organizations, health insurers, pharmacy benefit managers, and third party administrators is projecting at least a tempering in the sharp increase trend of recent years.

Physician costs next year, for example, are expected to rise 8.9 percent, compared to 9.9 percent in 2008, while prescription-drug costs are projected at a 9.8-percent, down from 10.7 percent.

Indeed, the projected overall hospital services trend rate comes in at 10.9 percent higher, down from the 11.3-percent that prevailed in 2008, according to the survey, from benefits, compensation, and human resource consultant The Segal Company.

The projected health plan costs trend rate is the projected change in health plans’ per-capita claims cost set by insurance carriers, says Segal. It notes, however, that while it typically correlates highly with actual costs increase, factors such as changes in plan design, employee contribution rate, and stop-loss coverage can affect its accuracy.

Segal notes that the 2009 projections for prescription drug trend rates reflect a historical low rate of increase, with the rate of increase dropping below medical plan trends into the single digits for the first time the 12 years the consultancy has conducted its annual survey.

While the overall prescription drug cost rate increase is down from 2008’s expectation, specialty drugs that require special handling and delivery or address complicated conditions, such as arthritis and cancer, are projected to be twice as trend rate of retail drugs.

Across all medical plan types, cost trends still are projected to exceed the inflation rate, the consumer price index for urban consumers, and the increase in annual weekly earnings for 2009, according to Segal.

Retirees, too, will see somewhat flatter trends in medical-plan increases next year, compared to the rises for people 65-years-old and younger. Retirees with Medicare coverage or private fee-for-service plans without prescription are expected to see a 8.2 percent increase, compared to the 9.7 percent projected increase for 2008. Those served by HMOs are expected to see a 7.1 percent increase, down from 8.8 percent.