Cost to employers for health care plans is expected to rise 10.5% within the next 12 months primarily as a result of rising costs, increasing demand for services and an aging population.

Aon Consulting, the global human capital consulting organization of Aon Corporation (AOC), surveyed about 60 health insurers around the country. The study found that average health care costs are expected to increase 10.5% in the next year, down slightly from last year’s increase forecast of 10.6%. Costs of prescription drugs are expected to increase 9.3%, slightly lower than the 9.4% trend rate in the prior year. The specialty pharmacy trend rate is 13.2%, up from 12.4% in the prior year.

For retirees over the age of 65 years, health care rate increases are projected to be 6.6% for Medicare Supplement plans and 7.3% for Medicare Advantage plans, down from 7.3% and 7.7%, respectively, a year ago.

The expected increase will not necessarily increase the premiums for employees at the same rate. Actual increases for each insurer or plan will depend on many factors, such as plan design, geography and the general health of the people covered, thus, will vary accordingly.

Some employers may ingest the higher costs because workers had already experienced salary freezes, reductions and layoffs this year. Employers also could deal with rising health care costs by limiting pay increases.
Approximately 30% of workers have chronic medical conditions, which account for 65% of the nation’s medical expenditure. So there is need for wellness programs and health promotion initiatives to provide a strong platform for effectively managing chronic conditions and preventing future problems. However, there is doubt about how much the individual will make use those programs as behavior change is never easy.
Read the full analyst report on “AOC”
Zacks Investment Research