HMO and PPO insurance to increase 11% in 2009

MedSave Admin | September 12, 2008

Human resource and benefits consulting group Buck Consultants released a report predicting that most health insurance costs will continue to climb at more than 10% through 2009. The report predicts that HMOs and PPO premiums will increase 11.1% and high deductible consumer driven insurance will increase 10.7%. Buck Consultants has been a reliable source of health care cost data for about 100 million of the Americans covered by group health insurance.

This report covers only group insurance. Costs for individual health insurance including the low cost insurance plans at MedSave.com have not increased at the same rate as group insurance due to the different design and evolution in benefits provided to this distinct market. There is no correlation in the cost trends of individual health insurance and group health insurance. In fact, some measurements show that expenditures for individual insurance have decreased in 2008 due to a shift in product coverage toward "mini-med" and supplemental health insurance policies.

This report underscores three important trends in our national health care costs: 1) Although health care costs continue to increase, the rate of inflation has continued to slow down for the past five years. Health care inflation is not the runaway problem we saw in the years up to 2003. 2) Health care costs for people covered by Medicare increased only 6.9% this year due to federal control of Medicare fees. The sharp difference in cost of care illustrates how some of the costs for Medicare patients are shifted to other patients covered by private group health insurance, contributing to the higher rate of inflation. In other words, the more that the government limits health care reimbursements for the people it covers, the higher the rate of cost inflation for other health plans. 3)The component with the highest rate of inflation is prescription drugs. Pharmacy costs increased 6.9% but due to increased utilization trends health insurance companies will raise prescription drug insurance premiums by 11.4%. This inflation trend is also moderating from higher levels in past years.

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