Improved Diagnosis: Health Care Costs Projected to Increase More Slowly

  Improved Diagnosis: Health Care Costs Projected to Increase More Slowly

Business Wire

NEW YORK -- December 17, 2012

Projected cost increases for all types of medical plans are anticipated to be
down by between 0.2 and 0.6 percent through the first half of 2013, according
to a survey by Buck Consultants, A Xerox Company (NYSE: XRX). This year was
the first time since 2001 that Buck’s survey indicated projected cost
increases less than 10 percent for any plan type, a trend that will continue
into 2013.

In a national survey of 123 insurers and administrators, Buck measured the
projected average annual increase in employer-provided health care benefit
costs. Insurers and administrators providing medical trends for the survey
cover a total of approximately 109 million people.

In its 25th National Health Care Trend Survey, Buck found costs are projected
to increase at rates that are slightly lower than its prior survey, as shown
in the following chart.

Type of Plan                            Buck’s National Health Care Trend
                                          25^th Survey      24^th Survey
Preferred Provider Organization (PPO)     9.7       %        9.9      %
Point-of-service (POS)                    9.5                9.9
Health Maintenance Organization (HMO)     9.3                9.9
High Deductible Health Plan (HDHP)        9.6                9.9

“Despite the lower trend, though, health care costs continue to outpace
general inflation – creating difficult business decisions for organizations,”
said Daniel Levin, FSA, a Buck principal and consulting actuary who directed
the survey. “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. 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.”

Health insurers reported an average prescription drug trend of 10.1 percent,
an increase of .5 percent from the prior survey. It is also more than twice
the 4.1 percent reported by pharmacy benefit managers (PBMs) – third-party
administrators of prescription drug programs, who generally do not take any
underwriting risk. The continued shift to generic drug use is a significant
factor in the reduced drug trends shown by PBMs.

For plans that supplement Medicare, health insurers reported a trend of 5.4
percent excluding prescription drug coverage, down from 5.8 percent in the
prior survey. This lower trend of Medicare Supplement plans reflects the
impact of federal controls on Medicare fees and the lower increases expected
in Medicare deductibles and copays.

“Another health care trend we’ll be watching is the impact of private health
insurance exchanges,” said Levin. “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.”

The survey also reported trend factors for dental and vision plans.

Health insurers use trend factors to calculate premium rates, and large
self-funded employers use these trend factors to budget their future health
care costs. In general, trend factors provide for price increases that may
result from such variables as inflation, utilization of services, technology,
changes in the mix of services, and mandated benefits.

About the Survey

Buck’s 25th “National Health Care Trend Survey” is available at no cost to the
media by contacting Ed Gadowski at 910-253-9816. It is available to other
interested parties for $100 by calling 1-800-887-0509 or visiting

About Buck Consultants

Buck Consultants, A Xerox Company, is a leader in human resource and benefits
consulting with more than 1,500 professionals worldwide. Founded in 1916 to
advise clients in establishing and funding some of the nation’s first public
and private retirement programs, Buck is an innovator in the areas of
retirement benefits, health and welfare programs, talent and human resources
solutions, compensation, and employee communication. News and other
information about Buck Consultants are available at

About Xerox

With sales approaching $23 billion, Xerox (NYSE: XRX) is the world’s leading
enterprise for business process and document management. Its technology,
expertise and services enable workplaces – from small businesses to large
global enterprises – to simplify the way work gets done so they operate more
effectively and focus more on what matters most: their real business.
Headquartered in Norwalk, Conn., Xerox offers business process outsourcing and
IT outsourcing services, including data processing, healthcare solutions, HR
benefits management, finance support, transportation solutions, and customer
relationship management services for commercial and government organizations
worldwide. The company also provides extensive leading-edge document
technology, services, software and genuine Xerox supplies for graphic
communication and office printing environments of any size. The 140,000 people
of Xerox serve clients in more than 160 countries. For more information, visit, or
For investor information, visit

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Buck Consultants, A Xerox Company
Ed Gadowski, +1-910-253-9816
Text 100 for Buck Consultants
Nicole Pavlas, +1-585-697-2620
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