Segal: Health Plan Costs Remain Above Inflation

Projected trend cost increases for point-of-service (POS) medical plans (including prescription drugs) for active employees and retirees under 65 have declined from a high of 14.9% in 2003 to 11% in 2007 and are projected to be 10.5% for 2008.

Health maintenance organization (HMOs) (including prescription drugs) rates were 11.7% in 2007 and are expected to drop to 10.7% in 2008. Medicare Advantage HMO plans have the lowest projected medical cost trend for 2008 at 8.8%.

Prescription drug price hikes for active workers and retirees were 11.9% in 2007 and are projected at 10.7% for next year. Prescription drug projected cost trends have declined dramatically, by nearly nine percentage points, since their high of 19.5% in 2003.

Dental rates are expected to go down for all types of plans. However, fixed-scheduled plans and dental maintenance organizations (DMOs) have the lowest forecasted rates: 4.3%.

The survey also looked at medical trends by service type. For example, price inflation per hospital admission is expected to increase by 7.7% in 2008 for open-access PPO plans and prescription drug price inflation is projected to be 6.5%, whereas price inflation for physician services is forecasted to be at 4%.

The survey found some regional variation in medical trend projections – ranging from a low of 9.4% in the Midwest to a high of 11.7% in the West.

For a full copy of the Segal report go here .