2015 Segal Health Plan Cost Trend Survey

Abstract

Health benefit plan cost trend rates for 2015 are forecast to drop slightly for some coverage, but to increase substantially for prescription drug coverage, according to data compiled in the 2015 Segal Health Plan Cost Trend Survey, Segal's eighteenth annual survey of managed care organizations, health insurers, pharmacy benefit managers and third-party administrators.

Trend is the forecast of annual gross per capita claims cost increases that takes into account various factors, such as price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology. Although there is usually a high correlation between a trend rate and the actual cost increase assessed by a carrier, trend and the net annual change in plan costs are not the same. Changes in the costs to plan sponsors can be significantly different from projected claims cost trends, reflecting such diverse factors as group demographics, changes in plan design, administrative fees, reinsurance premiums and changes in participant contributions.

Notable findings from the survey include the following:

  • Medical health plan trends for actives and retirees under age 65 are forecast to vary widely for 2015, from a low of 6.2percent for health maintenance organizations (HMOs) to a high of 10.4 percent for fee-for-service coverage.
  • More closely managed medical plans, like HMOs and preferred provider organizations (PPOs)/point-of-service (POS) plans with primary care gatekeeper models, are forecast to see a 1 percentage-point drop from 2014 projections.
  • Projected 2015 trend rates for PPOs and POS plans combined show regional variations.
  • The increase in the cost of prescription drug carve-out coverage for actives and retirees under age 65 is expected to jump to nearly 9 percent. Prescription drug trend for retirees age 65 and older is expected to rise to 7.5 percent, more than twice the rate of retiree medical cost trends.
  • The projected specialty drug/biotech trend rate for 2015 is an exceptionally high 19.4 percent.
  • Trends for dental coverage are expected to be either flat or higher for 2015 compared to 2014 projections, whereas trends for vision coverage are forecast to be lower.
  • Price inflation remains the largest component of trend for hospital services and brand-name medications.

The survey also examined 2015 projected medical trends by service type (hospitals, physicians and prescription drugs). Similar to prior-year projections, price inflation remains the largest component of cost increases.

The key findings from Segal’s 2015 Health Plan Cost Trend Survey are illustrated in an infographic that can be found here.