CHICAGO Healthcare costs are expected to increase on average 10.5% in the next 12 months, Aon Consulting announced Tuesday.
Aon Consulting surveyed more than 60 healthcare insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.4% for health maintenance organizations (HMOs), 10.4% for point-of-service healthcare plans, 10.7% for preferred provider organization (PPOs) and 10.5% for consumer-driven health plans.
These are slightly lower than one year ago, when HMO cost increases were 10.6% and POS plans were 10.5%.
“This data helps employers evaluate the competitiveness of health insurance premium renewals,” stated John Zern, Aon Consulting’s U.S. Health & Benefits Practice director. For employers with self-funded health plans, it helps in developing future claim estimates for budgeting purposes.
“While we’re seeing a slight decrease in the trend rates, it’s still at double digits, and this year, it’s compounded by a struggling economy, lower wage increases, and in some cases, salary freezes,” Zern added.
Aon Consulting’s U.S. Health & Benefits chief medical officer, Paul Berger, acknowledges there has been progress in lowering the medical trend rate during the last several years, but emphasizes there’s still significant work to be done. He suggests wellness and health promotion initiatives are critical in the next phase of lowering the medical trend rate.
“Approximately 30% of workers have chronic medical conditions, which account for 65% of this nation’s medical spend,” Berger said. “Wellness programs provide a strong platform for effectively managing chronic conditions and preventing future problems, but it’s up to the individual to take advantage of the programs offered. Behavior change is never easy, but those willing to make changes in this capacity benefit from better health and lower healthcare costs.”
Prescription drug costs are expected to increase 9.3%, which is slightly lower than the 9.4% trend rate one year ago. The specialty pharmacy trend rate is 13.2%, up from 12.4% one year ago. Aon Consulting points to the sluggish rate of drug adoption across the board, compounded by the FDA’s reduced rate of drug approvals - especially for new molecular entities and biologic products - as the contributing factors leading to this decline.
In addition, healthcare rate increases for retirees over the age of 65 are projected to be 6.6% for Medicare Supplement plans and 7.3% for Medicare Advantage plans, down from 7.3% and 7.7%, respectively, one year ago.