HR Resources Database

HR Resources Database November -0001

U.S. Employers Face 10.5% Healthcare Costs Increase


New data from Aon Consulting suggest that healthcare costs are expected to increase an average of 10.5% for U.S. employers in the next 12 months. Aon's survey of more than 60 major healthcare insurers found that costs are projected to increase by 10.4% for HMOs, 10.4% for point-of-service plans, 10.7% for preferred provider organizations and 10.5% for consumer-driven health plans.
"This data help employers evaluate the competitiveness of health insurance premium renewals," says John Zern, Aon Consulting's U.S. health and 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."

According to Aon's U.S. health and benefits chief medical officer, Dr. Paul Berger, while there has been progress in lowering the medical trend rate during the last several years, there's still significant work to be done. He suggests that 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," says Berger. "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. Behaviour 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%, down one percentage point from a year ago, while the specialty pharmacy trend rate is 13.2%, up from 12.4% last year. Leading factors to the decline include 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, according to Aon.

Also, 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% last year, respectively.


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