CNY Business Journal (1996+) - Survey forecasts lowest health-insurance rate hike in 7 years

Preliminary results from Milliman’s 2006 Group Health Insurance Survey indicate the lowest rate increase in seven years. This is the fourth year in a row in which the rate of increase has declined.
The 2007 estimated January renewal increase of 9.7 percent for health-maintenance organizations (HMOs) is 0.9 percent lower than last year’s survey result of 10.6 percent, and down 7 percent from four years ago. Preliminary results for preferred-provider organizations (PPOs) show an anticipated 2007 renewal rate increase of 10.7 percent, which is 1 percent lower than last year but 1 percent higher than for HMOs.

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The survey, in its 15th year, was sent to the nation’s HMOs and fully insured PPOs that serve the commercial large and midgroup employer market. Results are preliminary. Milliman will continue collecting data for the 2006 Group Health Insurance Survey through the summer months. Every year about 40 percent of all eligible insurers participate. Final results will be published in October.
Milliman says there are many possible contributing factors to the rise in healthcare costs, including an aging population, increasing consumer demand, rising rates of conditions such obesity, diabetes, and asthma, new technology and specialty drugs, high medicalmalpractice litigation costs, health-care work-force shortages, a move away from managed care, costshifting impact from government health-care programs, costs to comply with HIPAA, and changing consumer attitudes about health care. “Look for the 2006 survey to report a continuing shift to [consumer-driven health-care] products,” predicts Doug Proebsting, co-author of this year’s survey. The 2005 survey reported insurers were offering products with high deductibles and employee accounts in nearly all of their employer markets. “As costs escalate, employers, through education, cost sharing and spending accounts, are looking to engage employees to help reduce costs,” he added.
The annual Milliman survey asks HMOs and PPOs to respond to a given set of benefits and demographics. The survey removes three important factors that can skew the results of a typical survey on health costs: differences in benefit-design scope, costsharing levels, and member demographics, Milliman says.
Final results later this year will include premium rates and trends by component, hospital inpatient cost and utilization data, physician reimbursement levels, medical expense ratios and profit levels. Results will be provided by metropolitan area, state, region, And nationwide. Results for HMOs and PPOs will be shown separately. The survey will also include information on the implementation of consumer-driven approaches to health care and disease management programs.
Milliman has 32 offices in the United States as well as offices in about a dozen world cities. Milliman employs approximately 1,900 people, including a professional staff of about 850 consultants and actuaries. The firm has consulting practices in health care, property and casualty insurance, employee benefits, and life insurance/financial services.
Copyright Central New York Business Journal Aug 04, 2006
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