A 10 percent cost increase is projected for many popular health plans in 2011, as a number of health care reform provisions go into effect for employer plans.
The expected cost increase was measured by more than 120 insurers and administrations in a national survey, conducted by Buck Consultants. Surveyed insurers providing medical trends cover a total of roughly 150 million people.
Buck finds costs are predicted to rise at slightly higher rates than from the trends reported in the two previous surveys, according to the 22nd National Health Care Trend Survey.
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"The trend factors reported in our survey reflect, in part, that health insurers anticipate higher claim costs under health care reform," says Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey. "Also, due to current economic uncertainty, insurers may be projecting higher claim costs because employees who remain after layoffs tend to be older and more expensive to insure."
The survey also notes that the trend increase for high-deductible health plans is projected to be at or near those for PPO, POS and HMO plans.
"One reason for this is the more pronounced deductible 'leveraging' effect for HDHPs," Sobel says.
For example, Sobel says, a $10,000 medical bill in a $100-deductible plan costs the insurer $9,900. That medical bill rises to $11,000 if the trend rate is 10 percent, and the cost to the insurer rises to $10,900 after the $100 deductible, meaning a 10.1 percent increase over the previous $9,900 cost.
In a high-deductible plan, the same $10,000 medical bill costs the insurer $9,000 with a $1,000 deductible, Sobel explains. With the same 10 percent trend rate, the medical bill again rises to $11,000 and, after the $1,000 deductible, the cost to the insurer rises to $10,000 – or an 11.1 percent increase over the previous $9,000 cost.
The average prescription drug trend, health insurers report, is 11.3 percent, rather than10.9 percent, which was reported in the earlier survey. The new figure is almost twice the 5.8 percent reported by pharmacy benefit managers that typically do not take an underwriting risk.
Health insurers report a projected increase of 6.4 percent for supplemental Medicare plans, though that exludes prescription drug coverage. This is up from 5.8 percent in the previous survey, showing the effect of federal controls on Medicare fees and the lower increases projected in Medicare deductibles and copays.
Dental and vision plan trend factors are also documented in this survey.
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