Rate of Health-care Benefit Increases Slowing

Health care cost increases may be leveling off. According to the Mellon Financial Corporation’s National Health Care Trend survey of nearly 100 insurers, HMOs and third-party administrators, 2004 cost increases ranged from .9 percent to 1.6 percent less than 2003.

From 2003 to 2004, the rate increase for preferred provider organizations (PPOs) fell from 14.8 to 13.8 percent; from 14.3 to 13.4 percent for point-of-service (POS) plans; and from 14 to 12.4 percent for health maintenance organizations (HMOs).

Harvey Sobel, the Mellon consulting actuary who directed the study, insurers cite three reasons for the declines:

• Improved financial results
• More favorable relationships with hospitals and physicians
• A desire to be more competitive in the marketplace

The study projected employer-provided health benefit costs through 2004.

Source: 2005 Employee Benefit News