Analysts clash over level of health premium increases

Rate increases for small group health insurance are headed either up or down, depending on which study you choose to believe.

Life & Health


Nearly all analysts in the health insurance industry expected healthcare benefits costs to increase as a result of the Affordable Care Act, but two new reports suggest consensus on all aspects of the health law is not to be expected.

Depending on which analyst you choose to believe, rate increases will either slow this year or increase significantly.

The good news comes from Xerox subsidiary Buck Consultants. Based on responses from 126 healthcare insurers and administrators of employer-provided medical plans, Buck predicted rates will decrease 0.1% to 0.5%—a trend which started in 2010.

The survey also reports a 0.7% decrease in the prescription drug trend for non-Medicare Supplement plans.

“This may be a result of the economic slowdown and its impact on consumers’ willingness to seek medical treatment,” said study co-author and consulting actuary Harvey Sobel.

There is also fodder for naysayers, however. Towers Watson released a Thursday study suggesting that rates may actually increase 8.3% globally—slightly higher than the 7.9% and 7.7% increases seen in the past two years.

The Towers Watson survey collected responses from 173 leading medical insurers in 58 countries, analyzing the cost of employee healthcare benefits by region. According to the survey, more than half (55%) of insurers in all regions expect rates to rise at a higher or significantly higher trajectory than in the past.

“While the cost of providing health care benefits to employees has stabilized over the past few years, controlling rising costs remains a significant concern for employers worldwide,” said Francis Coleman, director, International Consulting, at Towers Watson. “In fact, in all regions, health costs continue to rise at twice the rate of inflation. That’s a major concern for employers, with many insurers projecting costs to again escalate in the coming years.”

Carriers cited in the survey point to over-prescription of medical services, inappropriate care and poor policyholder health habits as causes for the increase.

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