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2013 Segal Health Plan Cost Trend Survey Released: Trend Rates at Lowest Level in 11 Years

NEW YORK--(BUSINESS WIRE)-- Health benefit plan cost trend rates for 2013 are expected to decline to the lowest level in 11 years of trend forecasts, with most medical and all prescription drug projected trends dipping into single digits, according to the data compiled in the 2013 Segal Health Plan Cost Trend Survey, The Segal Company's 16th annual survey of health plan cost trends.

Edward A. Kaplan, SVP and Segal’s National Health Practice Leader noted, “While medical and prescription drug trends are projected to decelerate in 2013, we don’t know if deceleration is a long-term trend or a temporary result of current economic forces. We question whether medical care that is being delayed or avoided could lead to higher rates of undetected or untreated conditions in the future.”

Key findings:

  • Almost all medical plan types are expected to experience trend increases under 10% (with the exception of fee-for-service/indemnity plans). All managed care cost trends are forecast to be in the single digits.
  • Trends for HMOs, PPOs/POS plans are projected to be approximately 1 percentage point or more lower for 2013 than were projected for 2012.
  • Pharmacy benefit cost trends are projected to be 6.4%, substantially below the double digit trends of a decade earlier.

Complete survey results: http://www.segalco.com/publications/surveysandstudies/2013trendsurvey.pdf

In addition to compiling forecasted trend rates, the survey examined the accuracy of 2011 projections – and an online supplement features a graph that shows selected actual and projected trend data from the last 13 surveys and another graph of selected medical trends for actives and retirees under age 65: http://www.segalco.com/publications/surveysandstudies/2013trendsurveysupplement.pdf

What is Trend?

Trend is a forecast of per capita claims cost increases that takes into account various factors, such as price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology. See page 2 of the survey report for more information.

Impact of ACA:

The report also studied the projected impact of the ACA on health benefit offerings. In the short term, the ACA is expected to increase plan sponsors’ costs by only a minimal amount. The vast majority of survey respondents (86%) indicated that the cost impact on 2012 plan trend of implementing the law's preventive care coverage requirements for plans that lost "grandfathered" status was 2% or less.

Kaplan commented, “Plan sponsors must continue to focus on medical cost management strategies that improve the health of their participants and reduce complications from disease which in turn will help to reduce the frequency and intensity of higher cost claims and future premium increases.”

Segal recommends that plan sponsors focus on:

  • Contracting with stable and cost-effective provider networks
  • Implementing incentive-driven plan designs
  • Exploring ways to move providers to outcome-based compensation
  • Using on-site and walk-in clinics for basic medical services and
  • Improving efforts aimed at early detection of disease, better control of chronic ailments and more effective wellness efforts.

The Segal Company (www.segalco.com) is an independent, US-based firm of benefit, compensation and human resources consultants. Clients include joint boards of trustees administering pension and health and welfare plans under the Taft-Hartley Act, corporations, non-profit organizations, professional service firms and state and local governments.

Mary L. Feldman, 212.251.5029
Senior Vice President, Public Affairs
mfeldman@segalco.com

Source: The Segal Company