Aug 25, 2009
CHICAGO, Aug. 25 /PRNewswire-FirstCall/ -- Health care costs are expected to increase on average 10.5 percent in the next 12 months,(1) according to Aon Consulting, the global human capital consulting organization of Aon Corporation (NYSE: AOC).
Aon Consulting surveyed more than 60 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans. These are slightly lower than one year ago, when HMO cost increases were 10.6 percent and POS plans were 10.5 percent. PPOs and CDH plans remain steady at 10.7 percent and 10.5 percent, respectively. (See below for trend data from Aon Consulting's prior health care surveys.)
"Aon Consulting conducts a health care trend survey twice a year to forecast the expected future increase in employer-provided health plan claims cost, before any plan changes, based on input from leading health plan actuaries," said John Zern, Aon Consulting's U.S. Health & Benefits Practice director. "This data helps employers evaluate the competitiveness of health insurance premium renewals. For employers with self-funded health plans, it helps in developing future claim estimates for budgeting purposes.
"While we're seeing a slight decrease in the trend rates, it's still at double digits, and this year, it's compounded by a struggling economy, lower wage increases, and in some cases, salary freezes."
Aon Consulting's U.S. Health & Benefits Chief Medical Officer, Dr. Paul Berger, acknowledges there has been progress in lowering the medical trend rate during the last several years, but emphasizes there's still significant work to be done. He suggests wellness and health promotion initiatives are critical in the next phase of lowering the medical trend rate.
"Approximately 30 percent of workers have chronic medical conditions, which account for 65 percent of this nation's medical spend," said Berger. "Wellness programs provide a strong platform for effectively managing chronic conditions and preventing future problems, but it's up to the individual to take advantage of the programs offered. Behavior change is never easy, but those willing to make changes in this capacity benefit from better health and lower health care costs."
Prescription drug costs are expected to increase 9.3 percent, which is slightly lower than the 9.4 percent trend rate one year ago. The specialty pharmacy trend rate is 13.2 percent, up from 12.4 percent one year ago. Aon Consulting points 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 - as the contributing factors leading to this decline.
In addition, health care rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans, down from 7.3 percent and 7.7 percent, respectively, one year ago.
To learn more about this Health Care Trends Survey, please visit http://insight.aon.com/?elqPURLPage=4355.
About Aon Consulting's Health & Benefits Practice
Aon Consulting's Health & Benefits Practice is a global leader, with one of the largest wholly owned networks of worldwide offices of any consulting firm. To learn more about Aon Consulting's health care reform initiatives, please visit http://www.aon.com/healthcarereform.
About Aon Consulting
Aon Consulting is among the top global human capital consulting firms, with 2008 revenues of $1.358 billion and more than 6,300 professionals in 229 offices worldwide. Aon Consulting works with organizations to improve business performance and shape the workplace of the future through employee benefits, talent management and rewards strategies and solutions. Aon Consulting was named the best employee benefit consulting firm by the readers of Business Insurance magazine in 2006, 2007 and 2008. For more information on Aon, please visit www.aon.mediaroom.com.
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 37,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008 and 2009 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008. A.M. Best deemed Aon the number one insurance broker based on brokerage revenues in 2007 and 2008, and Aon was voted best insurance intermediary, best reinsurance intermediary and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com/.
(1) This survey forecasts the health care trend rates for the 12-month rating periods between April 2009 and September 2009.
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The following table summarizes the Aon Consulting Health Care Trends Survey results from 2002 - current:
Spring Spring Spring Spring 2002 2003 2004 2005 Medical - Actives & Retirees <65 (with Rx) HMO 16.2% 16.4% 14.1% 13.2% POS 16.0% 16.1% 14.1% 13.0% PPO 16.0% 15.7% 14.2% 13.0% Indemnity 18.3% 17.2% 15.3% 14.6% CDH 14.1% 12.7% Medical - Actives & Retirees <65 (without Rx) HMO 14.6% 14.7% 13.4% 12.9% POS 14.5% 14.5% 13.5% 12.7% PPO 14.6% 14.4% 13.5% 12.7% Indemnity 17.1% 16.4% 14.7% 14.6% CDH 13.3% 12.4% Medical - Retirees Age 65+ (with Rx) Medicare Supplement Medicare Advantage Medical - Retirees Age 65+ (without Rx) Medicare Supplement Medicare Advantage Dental DHMO 4.4% 4.8% 5.0% 4.7% PPO 7.6% 7.6% 7.3% 7.1% Indemnity 8.4% 7.6% 7.7% 7.6% Pharmacy General 17.8% 17.7% 14.4% 13.1% Specialty 22.5% Vision 3.2% 3.8% 3.9% 3.9% Spring Spring Spring Spring 2006 2007 2008 2009 Medical - Actives & Retirees <65 (with Rx) HMO 12.2% 10.9% 10.6% 10.4% POS 11.9% 10.8% 10.5% 10.4% PPO 12.4% 11.2% 10.7% 10.7% Indemnity 14.4% 12.7% 12.4% 11.9% CDH 12.5% 10.7% 10.5% 10.5% Medical - Actives & Retirees <65 (without Rx) HMO 12.0% 11.0% 10.8% 10.5% POS 11.8% 10.9% 10.5% 10.5% PPO 12.3% 11.3% 10.9% 11.0% Indemnity 14.4% 13.1% 12.6% 12.4% CDH 12.3% 10.7% 10.3% 10.4% Medical - Retirees Age 65+ (with Rx) Medicare Supplement 11.5% 11.2% 7.3% 6.6% Medicare Advantage 10.2% 9.2% 7.7% 7.3% Medical - Retirees Age 65+ (without Rx) Medicare Supplement 9.9% 9.0% 7.3% 6.6% Medicare Advantage 8.0% 8.0% 7.0% 7.0% Dental DHMO 4.8% 4.5% 4.2% 4.1% PPO 6.7% 6.1% 6.3% 5.9% Indemnity 7.1% 7.1% 7.0% 6.5% Pharmacy General 12.2% 9.5% 9.4% 9.3% Specialty 17.0% 15.1% 12.4% 13.2% Vision 3.6% 3.1% 3.1% 2.9%
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SOURCE: Aon Corporation
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