Aon Projects Smaller Rise In Health Care Costs

October 29, 2008
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Employers can expect a 10.6 percent increase in health care costs for the next year, according to a study from Aon Consulting Worldwide. Even though it's in double-digit territory, it's the smallest anticipated hike since the annual study's inception in 2001, Aon reported.

The consulting firm, which has 500 offices around the world including one in Grand Rapids, surveyed more than 70 health insurers who cover 100 million people.

"We provide this trend data to help employers evaluate the competitiveness of health insurance premium renewals," said Bill Sharon, Aon senior vice president and study director.

Data since 2001 show that the rate of health care cost increases is on a downward trend. Even though the cost growth still outstrips the Consumer Price Index, the predicted hikes are slowing compared to seven years ago, when the average price hike shot past 16 percent.

"This is a step in the right direction for companies nationwide that continue to feel significant health care price pressures," said John Zern, Aon Consulting's U.S. health and benefits practice director.

Aon found prescription drug costs are expected to go up 9.2 percent, compared to 9.5 percent last year.

Medicare Supplement and Medicare Advantage plans are expected to see a significant slowdown in price growth, according to the survey. Medicare Supplement price growth is expected to be 7.3 percent, down from 11.2 percent last year, while Medicare Advantage plans are expected to average 7.7 percent higher, compared to 9.2 percent last year. HQ

Aon Health Care Cost Trend Forecast:
For 12-Month Rating Periods April-September 2008

  Spring 2002    Spring 2008

Medical: Actives & Retirees <65 (with Rx)

HMO  

          16.2%

10.6%

POS  

16.0%

           10.5%

PPO  

16.0%

10.7%

Indemnity 

18.3%

12.4%

CDH  

N/A  

10.5%

Medical: Actives & Retirees <65 (without Rx)

HMO  

          14.6%

10.8%

POS  

14.5%

           10.5%

PPO  

14.6%

10.9%

Indemnity 

17.1%

12.6%

CDH  

N/A  

10.3%

Medical: Retirees Age 65+ (with Rx)

Medicare Supplement

         N/A

7.3%

Medicare Advantage

N/A

           7.7%

Medical: Retirees Age 65+ (without Rx)


Medicare Supplement

         N/A

7.3%

Medicare Advantage

N/A

           7.0%

Dental


DHMO

         4.4%

4.2%

PPO

7.6%

           4.3%

Indemnity

8.4%

           7.0%

Pharmacy

General

         17.8%

9.2%

Specialty

N/A

           12.2%

Vision

3.2%

           3.1%

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