Medical costs, utilization rates decline again

The rate of increase for medical costs and prescription drugs are projected to decline in 2008, according to the Segal Health Plan Cost Trend Survey. This marks the fifth consecutive year of slower rates of increases for medical claims.

Meanwhile, the rise in the costs for prescription drug coverage has slowed at about the same pace, declining by nearly 9 percentage points, since their high of 19.5 percent in 2003. This downward trend is occurring across all managed care plan types. The report says that more claims for generic drugs have been filed, due to patent expiration and PBM efforts.

Nearly 25 percent of survey respondents forecasted that the cost of medical claims and perscription coverage for PPOs will be about 10 percent of the total PPO budget. Four years ago, 3 percent of respondents forecasted that such costs would be under 10 percent for 2004. Nearly one-third of respondents say that prescription drug costs for 2008 would be less than 10 percent, up from 3 percent of respondents in the 2004 survey.

Projected medical and prescription drug trends, 2007-2008

*Trend projections were derived by proportionally blending medical plan trends and freestanding prescription drug trends.
**HDHPs are defined as those where the deductible is at least the minimum health savings account (HSA) level required by the Internal Revenue Services.
***Open access PPOs and POS plans are those that do not require a primary care physician gatekeeper referral for specialty services.
****MA plans, part of the Medicare program, can be FFS plans, HMOs, PPOs, or special needs plans.
Source: 2008 Segal Health Plan Cost Trend Survey.

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