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Employers Face 10.6 Percent Health Care Cost Increases, Says Aon Consulting
Companies experiencing lowest increase since study began in 2001, as costs continue to trend down

CHICAGO, Aug. 12 /PRNewswire-FirstCall/ -- Health care costs are expected to increase on average 10.6 percent in the next 12 months,(1) according to Aon Consulting Worldwide, the global human capital consulting organization of Aon Corporation (NYSE: AOC).


Aon Consulting surveyed more than 70 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.6 percent for HMOs, 10.5 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans. These represent the lowest trend rate increases since the study began in 2001, and are slightly lower than one year ago, when HMO cost increases were 10.9 percent, 10.8 percent for POS plans, 11.2 percent for PPOs and 10.7 percent for CDH plans. (See page 3 for trend data from Aon Consulting's prior health care surveys.)

"Unlike some other healthcare trend surveys, Aon Consulting's survey reports the expected future increase in employer-provided health plan claims cost before any plan changes, based on the opinions of health plan actuaries," said Bill Sharon, senior vice president with Aon Consulting and director of the study. "We provide this trend data to help employers evaluate the competitiveness of health insurance premium renewals. For employers with self-funded health plans, this trend data helps them (and their actuaries) develop future claim estimates for budgeting purposes."

Aon Consulting's U.S. Health & Benefits practice director, John Zern, said of the survey results: "While the medical trend rate is still more than twice the consumer price index, it is encouraging to see that health care cost rate increases are continuing to slow down. This is a step in the right direction for companies nationwide that continue to feel significant health care price pressures."

Sharon attributes the decrease in the medical trend rate to more employers and employees taking advantage of wellness, health promotion and consumer driven programs. "But more must be done to truly 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," he said.

Prescription drug costs are expected to increase 9.2 percent, which is slightly lower than the 9.5 percent trend rate one year ago. The specialty pharmacy trend rate is 12.2 percent, down from 15.1 percent in spring 2007. 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 7.3 percent for Medicare Supplement plans and 7.7 percent for Medicare Advantage plans, down from 11.2 percent and 9.2 percent, respectively, one year ago.

  Note to editors: Report available upon request.

  About Aon

Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's "best broker" by Euromoney magazine's 2008 Insurance Survey. Aon also was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto

About Aon Consulting

Aon Consulting Worldwide ( is among the top global human capital consulting firms, with 2007 revenues of $1.352 billion and 6,335 professionals in 117 offices worldwide. Aon Consulting is shaping the workplace of the future through 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 and 2007.

  (1) This survey forecasts the health care trend rates for the 12-month
      rating periods beginning from April 2008 to September 2008.

   Media Contact:
   Kelly Drinkwine                                 Sara Carlson
   312.755.3537                                    312.381.5045      

The following table summarizes the Aon Consulting Health Care Trends Survey results from 2002 - 2008:

               Spring   Spring   Spring   Spring   Spring   Spring   Spring
                2002     2003     2004     2005     2006     2007     2008
  Medical - Actives & Retirees <65 (with Rx)
    HMO         16.2%   16.4%     14.1%    13.2%    12.2%    10.9%    10.6%
    POS         16.0%   16.1%     14.1%    13.0%    11.9%    10.8%    10.5%
    PPO         16.0%   15.7%     14.2%    13.0%    12.4%    11.2%    10.7%
    Indemnity   18.3%   17.2%     15.3%    14.6%    14.4%    12.7%    12.4%
    CDH                           14.1%    12.7%    12.5%    10.7%    10.5%
  Medical - Actives & Retirees <65 (without Rx)
    HMO         14.6%   14.7%     13.4%    12.9%    12.0%    11.0%    10.8%
    POS         14.5%   14.5%     13.5%    12.7%    11.8%    10.9%    10.5%
    PPO         14.6%   14.4%     13.5%    12.7%    12.3%    11.3%    10.9%
    Indemnity   17.1%   16.4%     14.7%    14.6%    14.4%    13.1%    12.6%
    CDH                           13.3%    12.4%    12.3%    10.7%    10.3%
  Medical - Retirees Age 65+ (with Rx)
    Supplement                                      11.5%    11.2%     7.3%
    Advantage                                       10.2%     9.2%     7.7%
  Medical - Retirees Age 65+ (without Rx)
    Supplement                                       9.9%     9.0%     7.3%
    Advantage                                        8.0%     8.0%     7.0%
    DHMO         4.4%    4.8%      5.0%     4.7%     4.8%     4.5%     4.2%
    PPO          7.6%    7.6%      7.3%     7.1%     6.7%     6.1%     6.3%
    Indemnity    8.4%    7.6%      7.7%     7.6%     7.1%     7.1%     7.0%
    General     17.8%   17.7%     14.4%    13.1%    12.2%     9.5%     9.2%
    Specialty                              22.5%    17.0%    15.1%    12.2%
                 3.2%    3.8%      3.9%     3.9%     3.6%     3.1%     3.1%

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SOURCE: Aon Corporation

CONTACT: Kelly Drinkwine, +1-312-755-3537,, for Aon Corporation, or Sara Carlson of Aon
Corporation, +1-312-381-5045,

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