Health Care Cost Increases to Continue at Double Digit Rates, According to Buck Consultants Survey

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Costs for the most popular types of health care coverage are projected to increase at double-digit rates through the remainder of 2009 and into 2010, according to a recent national survey of insurers and administrators conducted by Buck Consultants.

Health insurers may increase costs in light of the continuing economic downturn and legislation such as mental health parity and the recent expansion of COBRA. They may also attempt to increase their prices prior to the implementation of national health care reform, including a new ‘public insurance option’.

Costs for the most popular types of health care coverage are projected to increase at double-digit rates through the remainder of 2009 and into 2010, according to a recent national survey of insurers and administrators conducted by Buck Consultants, an ACS company.

“Although our survey reveals a slight decrease in cost trends since our prior study, there are signs that we’re going into another cycle of high trends,” said Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey. “Health insurers may increase costs in light of the continuing economic downturn and legislation such as mental health parity and the recent expansion of COBRA. They may also attempt to increase their prices prior to the implementation of national health care reform, including a new ‘public insurance option’.”

For its 20th National Health Care Trend Survey, Buck Consultants analyzed responses from more than 100 health insurers, HMOs and third-party administrators. Buck measured the projected average annual increase in employer-provided health care benefit costs. Insurers providing medical trends for the survey cover a total of approximately 95 million people.

Costs for the most popular plans (see below) continue to increase by more than 10 percent, and are slightly lower than the trends reported in Buck’s previous survey, released in September 2008.

Type of Plan:    Preferred Provider Organization (PPO)
20th Survey:    11.0%
19th Survey:    11.1%
Difference:    -0.1%

Type of Plan:    Point-of-service (POS)
20th Survey:    10.2%
19th Survey:    10.8%
Difference:    -0.6%

Type of Plan:    Health Maintenance Organization (HMO)
20th Survey:    11.0%
19th Survey:    11.1%
Difference:    -0.1%

Type of Plan:    High Deductible Consumer Driven
20th Survey:    10.4%
19th Survey:    10.7%
Difference:    -0.3%

Health insurers reported an average prescription drug trend of 10.8 percent, down 0.6 percent from the 11.4 percent reported in the prior survey. This is three percentage points higher than the 7.8 percent reported by pharmacy benefit managers (who generally do not take any underwriting risk).

For plans that supplement Medicare, health insurers reported a projected increase of 7.4 percent excluding prescription drug coverage. This lower trend reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and copays.

The survey also reported trend factors for dental and vision plans.

Health insurers use trend factors to calculate 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.

Buck Consultants, an ACS company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation’s first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, human capital management, compensation, and employee communication. News and other information about Buck Consultants are available at http://www.buckconsultants.com. Buck is an independent subsidiary of Affiliated Computer Services, Inc.

ACS, a global FORTUNE 500 company with 74,000 people supporting client operations reaching more than 100 countries, provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company's Class A common stock trades on the New York Stock Exchange under the symbol "ACS." Learn more about ACS at http://www.acs-inc.com.

Buck’s 20th “National Health Care Trend Survey” is available to the media by contacting Ed Gadowski at 201-902-2825. It is available to other interested parties for $100 from Buck’s Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533. Telephone 800-887-0509. It also can be ordered online at http://www.bucksurveys.com.

Media Contact:
Ed Gadowski
Media Relations
Buck Consultants, LLC
201-902-2825

This press release was distributed through eMediawire by Human Resources Marketer (HR Marketer: http://www.HRmarketer.com) on behalf of the company listed above.

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