Buck Consultants on Medical Cost Trends

By November 21, 2018 Commentary

Buck Consultants is not one of the biggest benefit consulting firms, but does a lot of work with mid-size and other employers and routinely gives us insight into what is happening with their health plans, including a recent survey on current medical trends.   (Buck Survey)   110 health plans or administrators, with over 100 million covered lives, responded to the survey.  The headline numbers for medical trend expectations for 2019 are 7.5% for PPO designs, 7.7% for HMO ones and 7.4% for high deductible plans.  Note that all these are before any design changes are made and don’t include prescription drug trend.  That drug trend was separately estimated by respondents to be 10% for only health plans, but 5.7% by PBMs.  Hmmm, wonder if that difference might be the profit margin for PBMs!  Ancillary coverages like dental and vision are projected to have a lower trend.  These projected trends are slightly lower than those estimated last year for 2018, but still well above inflation.  Factors cited by respondents and Buck include hospital consolidation, utilization increases, cost-shifting from government programs and new technologies.  In the case of medications, two strong trends are somewhat offsetting each other.  On the one hand, increased use of generics and aggressive utilization management reduces spending; but on the other side, extensive marketing and direct-to-consumer campaigns and expensive new products, especially for cancer treatment, are raising costs.  Some of the new costs show up on the medical side, as many of the new drugs are administered intravenously or by injection.  While long-term charts reflect a steady decline from trend growth a decade ago, the rate of increase has plateaued for the last few years and remains quite high.  The pain continues.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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