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Group Benefits Costs to Rise at Slowest Rate in 11 Years: Study

A survey of 123 insurers and benefits administrators, released Dec. 17, indicated that group health care plan cost increases through June 2013 will be between 0.2 percent and 0.6 percent lower than they were in the first half of this year.

December 19, 2012
Related Topics: Health Care Costs, Health Care Benefits, Benefits, Latest News
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Group health benefits costs are projected to rise in the first half of 2013 at their slowest rate in more than a decade, according to a study by New York-based Buck Consultants L.L.C.

Buck's survey of 123 insurers and benefits administrators, released Dec. 17, indicated that group health care plan cost increases through June 2013 will be between 0.2 percent and 0.6 percent lower than they were in the first half of this year.

The study noted that 2012 was the first year since 2001 that group health benefit costs were projected to grow at a rate of less than 10 percent.

Daniel Levin, a Chicago-based Buck principal and consulting actuary who directed the study, said in a press release accompanying the report that despite the projected reduction in cost growth rates, health care costs are still predicted to outpace inflation rates, "creating difficult business decisions for organizations."

"The stubbornly high costs can be attributed to several trends, ranging from a greater use of diagnostic tests and treatments to mandated coverage of certain benefits," Levin said in the release. "Employers need to decide how much of these increases to pass on to workers, or whether to drop coverage and pay the penalties imposed by the Affordable Care Act."

Levin added that the study's projections do not contemplate potential impacts of the proliferation of private health insurance exchanges.

"It remains to be seen how the development of private exchanges will affect the use of public exchange models, but it could likely impact the projected cost trends we measure in this survey," he said.

Buck's study predicted costs for employer-sponsored preferred provider organization plans, point-of-service plans, health maintenance organization plans and high-deductible health plans will increase by 9.7 percent, 9.5 percent, 9.3 percent and 9.6 percent, respectively, through June 2013. A year ago, cost increases for all four plan types were projected to grow by 9.9 percent.

Costs for employer-sponsored Medicare supplemental plans are projected grow by 5.4 percent in the first six months of 2013, compared with 5.8 percent during the same period in 2012.

Matt Dunning writes for Business Insurance, a sister publication of Workforce Management. Comment below or email editors@workforce.com.

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