Costs Continue to Rise for Employee Health Benefits
Wells Fargo Insurance survey finds medical costs projected to increase in the high single digits in 2013
SAN FRANCISCO–(BUSINESS WIRE)– In a finding that will likely not surprise many businesses in the U.S., the cost of claims in employer-sponsored health plans continues to rise, according to a survey from Wells Fargo Insurance. Although rates remain consistent compared to six months ago, the survey of more than 70 insurance companies nationwide found that overall claim costs will continue to increase in the high single digits next year. The Wells Fargo Insurance Employee Benefits Survey was conducted between July and August 2012.
“Despite ongoing efforts to control healthcare expenses the survey found that insurers are not expecting a drop in claim costs for 2013,” said Dan Gowen, senior vice president of Wells Fargo Insurance’s national Employee Benefits Practice. “This means that employer premiums will likely rise, and it’s also likely consumers may pay more for their share of employer-sponsored healthcare plans. Employers seeking to minimize cost increases should explore more sophisticated ways to maintain and improve the health risk of employees and maximize their benefit investment.”
The survey also found that dental cost trends are lower than medical trends due to lack of cost shifting from public to private plans, and a negative cost impact from improvements in the dental technology field. Finally, survey results indicate prescription costs are down slightly, due to greater availability and the use of generic drugs.
Wells Fargo Insurance has been conducting this biannual survey since 2008 to measure national healthcare trends. Reflecting claim activity over a six-month period, projected increases in the national average cost of claims include the following:
- Health maintenance organizations (HMO) – 8.5 percent
- Point-of-sale (POS) – 8.7 percent
- Preferred provider organizations (PPO) and consumer driver health plans – 9.3 percent
- Exclusive provider organizations (EPO) – 9.4 percent
- Indemnity plans – 10.2 percent
- Prescription plans – 7.6 percent
In addition to healthcare reform provisions, claim trends are influenced by price inflation or deflation (changes in unit prices for the same services), increased or decreased use of services, population age, leveraging effect on benefit design, changes in provider treatment patterns, improvements in technology and drug therapies, and cost shifting.