Employers’ health costs could increase as much as 9% this year, according to a study of 126 insurers and/or plan administrators by Buck Consultants. “The actual increase in rates will also depend upon the underlying claim experience,” says Harvey Sobel, a Buck principal and consulting actuary who co-wrote the study. And it will depend on whether that employer is self-insured and on other factors. Yes, it is complex.
The slight slowdown in the rate of increase is not much solace for cash-strapped employers and workers, according to Buck’s “National Health Care Trend Survey.” The study points to one of the conundrums of living at a time when the technology is constantly improving. “While technology may ultimately be the key to containing health care cost increases, research and development costs often result in higher initial costs for these services.”
But there are other factors.
“This may be a result of the economic slowdown and its impact on consumers’ willingness to seek medical treatment,” says Harvey Sobel, a Buck principal and consulting actuary, co-author of the survey. “Even though the decline is good news, most plan sponsors still find 8%–9% cost increases unsustainable.
“Health plans will need to continue to look for ways to help plan sponsors control costs, including through better utilization management, provider reimbursement rates, and selection of high quality providers.”
Another problem, the report tells us: “Providers — particularly hospitals — have consolidated into hospital systems, giving them greater bargaining leverage with managed care organizations. As a result, these providers have been able to negotiate higher fees.”
Sobel says, “Health plans will need to continue to look for ways to help plan sponsors control costs, including through better utilization management, provider reimbursement rates, and selection of high quality providers.”
Real and projected cost increases
Source: “National Health Care Trend Survey,” Buck Consultants, May 2014