Buck Consultants Survey Indicates Slower Trend in Health Care Costs for Employers

The increases for most health care coverages are slowing, despite continued double-digit increases throughout 2006 and into 2007, according to a national survey of insurers and administrators. The survey released today by Buck Consultants, an ACS company and one of the worldís leading human resource and benefits consulting firms, analyzed responses of more than 70 health insurers, HMOs and third-party administrators.

In its 16th National Health Care Trend Survey, conducted in July 2006, Buck determined the projected average increase in employer-provided health care benefit costs. Insurers providing medical trends for the survey cover a total of approximately 58 million people.

As the data below indicates, costs for the most popular plans continue to increase at more than 10 percent, although they have dropped between one and two percentage points when compared to trends reported in Buckís previous survey, conducted in November 2005.

Type of Plan: Preferred Provider Organization (PPO)
16th Survey: 10.9%
15th Survey: 12.7%
Difference -1.8%

Type of Plan: Point-of-service (POS)
16th Survey: 10.8%
15th Survey: 12.0%
Difference -1.2%

Type of Plan: Health Maintenance Organization (HMO)
16th Survey: 10.8%
15th Survey: 11.8%
Difference -1.0%

Type of Plan: High Deductible
16th Survey: 11.0%
15th Survey: 12.3%
Difference -1.3%

Health insurers and pharmacy benefit managers reported prescription drug trend factors that are approximately two to three percentage points lower than those reported in Buckís prior survey.

Respondent: Pharmacy Benefit Managers
16th Survey: 6.9%
15th Survey: 9.8%
Difference -2.9%

Respondent: Insurers
16th Survey: 11.4%
15th Survey: 13.5%
Difference -2.1%

Respondent: Combined
16th Survey: 8.2%
15th Survey: 11.1%
Difference -2.9%

Harvey Sobel, FSA, a Buck Principal and Consulting Actuary who directed the survey, said the survey results are encouraging for employers.

ìAlthough health care trends are still higher than the general inflation rate, employers should see more moderate rate increases in 2007,î said Sobel. ìDrug trends are at the lowest level in the seven years weíve been conducting the survey, having dropped in half since 2002.î

Health insurers use trend factors by coverage ñ such as medical, prescription drugs, dental and vision care ñ to calculate their premium rates, and large self-funded employers use these trend factors to budget their future health care costs. In general, trend factors provide for price increases that may result from such variables as inflation, utilization of services, technology, changes in the mix of services, and mandated benefits.

Buckís survey also includes trend factors for Medicare supplement, dental and vision coverages.