Slowest Rate Of Health Plan Cost Increase In 14 Years Projected For 2014: Segal

Health benefit plan cost trend rates for all plan types in 2014 show the slowest growth in 14 years, according to the 2014 Segal Health Plan Cost Trend Survey. For high-deductible health plans, the projected cost trend is 7.9 percent in 2014, down from 8.6 percent in 2013. The Segal survey, conducted during May and June, contains responses from 99 managed care organizations, health insurers, pharmacy benefit managers, and third party administrators.

Segal projects that the cost trend rate for PPOs will increase 7.6 percent in 2013 (down from 8.3 percent in 2013), and the cost trend rate for HMOs will increase 7.0 percent (down from 7.9 percent). The survey also reported regional variations in combined trend rates for PPO and POS plans, with the lowest rate of 5.8 percent in the South and the highest rate of 10.0 percent in the West.

Dental PPO plans are projected to increase 3.4 percent in 2014 (down from 3.5 percent in 2013), and vision plans will increase 3.3 percent (down from 3.7 percent). The trend for prescription drugs for active employees and early retirees under age 65 is expected to increase 6.3 percent (down slightly from 6.4 percent). For Medicare Advantage HMO plans, the trend is projected at 4.2 percent (down from 5.6 percent).

Segal asked survey respondents about the expected impact of the Patient Protection and Affordable Care Act (ACA) on costs. Nearly two-thirds of respondents project a cost increase of 1 percent of less due to the loss of grandfathered status, with another quarter of respondents predicting the loss of grandfathered status will be cost neutral. Only 6 percent of respondents anticipate that implementing preventive care coverage for plans that lost their grandfathered status under the ACA will result in a cost trend increase of more than 3 percent.

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