Health costs decelerate, yet still climb fast

Employers shopping for health care in 2009 will find that premiums will increase on average 10.6 percent in the next year, a bit less than in 2008, according to a new report by Aon Consulting. The company surveyed more than 70 health insurers who collectively cover more than 100 million people.

They found that premiums are projected to increase by 10.6 percent for HMOs, 10.5 percent for point-of-service plans, 10.7 percent for preferred physician organizations, and 10.5 percent for consumer-directed health plans, from spring 2008 through fall 2009. These are the lowest increases since 2001, when Aon Consulting first started collecting data.

The rates are slightly lower than one year ago, when the increases were 10.9 percent for HMOs, 10.8 percent for POS plans, 11.2 percent for PPOs, and 10.7 percent for CDHPs.

Prescription drug costs are expected to increase 9.2 percent, slightly below the 9.5 percent of one year ago. Interestingly, the specialty pharmacy rate is 12.2 percent, down from 15.1 percent in the spring of 2007. The company says this can be attributed to the sluggish rate of drug adoption across the board, compounded by the FDA’s reduced rate of drug approvals — especially for new molecular entities and biologic products.

Bill Sharon, a senior vice president at Aon Consulting and director of the survey, attributes the slowdown to more employers and employees taking advantage of wellness, health promotion, and consumer-directed initiatives. But he says, “More must be done to stem the tide of rising health care costs. This includes greater senior management support for these programs, better employee communications, and more consistent cooperation from the medical community.”

Source: “Health Care Trend Survey: Spring 2008,” Aon Consulting

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