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Benefits firms: Health cost moderation to continue in 2013

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Benefits consultants have come out with a new crop of health benefits survey results.

Analysts at Segal, Aon Hewitt (NYSE:AON) and Towers Watson (NYSE:TW) agree that cost increases should be relatively low in 2013.  

Segal said the underlying medical cost increase trend could fall to the lowest level in 11 years.

Segal, which bases its predictions on a survey of benefits providers and administrators, said it expects the cost trend for a preferred provider organization (PPO) plan with a primary care doctor gatekeeper and prescription coverage to increase 8.8 percent in 2013, down from 9.8 percent this year.

The cost trend for high-deductible coverage could rise 8.6 percent, down from 9.8 percent this year, Segal said.

Segal said the 2011 cost trend was much lower than it expected. For PPO coverage with a gatekeeper and drug coverage, for example, the projected trend was 11.2 percent. The actual trend was just 7.8 percent.

Aon Hewitt came up with health insurance cost projections using a database of benefits information from 466 large U.S. employers.

The Aon Hewitt analysts predicted that premiums will increase 6.3 percent in 2013. That’s up from an actual rate of increase of 4.9 percent this year but down from 8.5 percent in 2011.

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The average health care cost per large-company employee is about $10,500 this year. The amount employers expect those employees to spend on co-payments, coinsurance amounts and deductibles has increased to $2,200 this year, from about $2,100 in 2011.

Similarly, the average employee’s share of premiums has increased to about $2,200 this year, from about $2,100 last year, the analysts said.

Towers Watson produced its forecasts by sending a survey to 440 employers of all sizes. The company looked mainly at the employers’ plans for coverage changes.

About 6 percent imposed a significant reduction in subsidies for coverage for spouses or dependents this year, and 7 percent expect to do so in 2013. About 31 percent said they may take that step in 2014 or 2015, when the Patient Protection and Affordable Care Act (PPACA) is set to take effect.

About 14 percent of the employers made major changes in plan options to control costs this year, 21 percent intend to do so in 2013, and 42 percent are thinking about doing so in 2014.

The changes should hold the net increase in total health plan costs per active employee to 5.3 percent in 2013, with the average cost per active employee increasing to about $11,500, the Towers Watson analysts said.

The employees’ share of the premiums could increase about 23 percent, to about $2,600, the analysts said.

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