Insurers expect larger premium increases for employers in 2016

Health care insurers foresee larger increases in employer-sponsored plan premiums into 2016, with rising claims costs exceeding general inflation for at least the next 18 months, according to the Spring Healthcare Trend Survey from Wells Fargo.

The survey of more than 65 insurance companies nationwide found that, before any plan design changes made by employers to their group health plan coverage, overall claim costs will continue to increase by 7 to 10 percent, signaling a sharper uptick in premium rates next year.

“Rising cost trends will force companies into a delicate balancing act of providing competitive benefits while also managing costs effectively and complying with regulations,” said Dan Gowen, national practice leader with Wells Fargo Insurance’s employee benefits national practice.

The survey found the following:
Medical claim cost increases will remain in the high single digits. The growth in claims costs for 2015 have ranged from 7.2 percent for health maintenance organizations (HMOs) to 9.0 percent for indemnity fee-for-service plans. While still increases are still in the single-digit, projections for 2016 are higher: 8.6 percent for HMOs and 9.6 percent for indemnity plans.
Specialty drug cost and use will continue rising. Despite overall stability in pharmacy claims cost growth compared to medical claims, Wells Fargo found a continued increase in prescription drug cost trends as a result of price increases in generic drugs and the growing use of specialty biotech drugs.
Employers will implement benefit design changes. Similar to the prior year, the surveyed insurers agreed that the top three plan design changes in 2015 will involve wellness initiatives, accountable care organizations (ACOs), and narrow or tiered provider network offerings.

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