Health Care Costs Projected To Increase At A Slower Rate In 2013: Buck Consultants

Projected cost increases for all types of medical plans are anticipated to be down by between 0.2 and 0.6 percent through the first half of 2013, according to a recent survey from Buck Consultants. This year was the first time since 2001 that Buck’s survey indicated projected cost increases less than 10 percent for any plan type, a trend that will continue into 2013. The survey, which measures the projected average annual increase in employer-provided health care benefit costs, reveals costs are projected to increase at rates that are slightly lower than its prior survey:

• preferred provider organization (PPO): 9.7 percent in 2013 (down from 9.9 percent in 2012).

• point-of-service (POS): 9.5 percent (down from9.9 percent).

• health Maintenance Organization (HMO): 9.3 percent (down from 9.9 percent).

• high deductible health plan (HDHP): 9.6 percent (down from 9.9 percent).

“Despite the lower trend, though, health care costs continue to outpace general inflation—creating difficult business decisions for organizations,” said Daniel Levin, FSA, a Buck principal and consulting actuary. “The stubbornly high costs can be attributed to several trends, ranging from a greater use of diagnostic tests and treatments to mandated coverage of certain benefits. Employers need to decide how much of these increases to pass on to workers, or whether to drop coverage and pay the penalties imposed by the Patient Protection and Affordable Care Act.”

Health insurers reported an average prescription drug trend of 10.1 percent, an increase of .5 percent from the prior survey. It also is more than twice the 4.1 percent reported by pharmacy benefit managers (PBMs)—third-party administrators of prescription drug programs, who generally do not take any underwriting risk. The continued shift to generic drug use is a significant factor in the reduced drug trends shown by PBMs, Buck noted.

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