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Health Care Cost Increases to Continue at Double Digit Rates, According to Buck Consultants Survey
Date:9/11/2008

NEW YORK, Sept. 11 /PRNewswire-FirstCall/ -- Costs for the most popular types of health care coverage are projected to increase at double-digit rates through the remainder of 2008 and into 2009, according to a national survey of insurers and administrators.

These are among the results of a survey released today by Buck Consultants, an ACS company and one of the world's leading human resource and benefits consulting firms. The study analyzed responses from 79 health insurers, HMOs and third-party administrators.

In its 19th National Health Care Trend Survey, Buck Consultants measured the projected average annual increase in employer-provided health care benefit costs. Insurers providing medical trends for the survey cover a total of approximately 98.7 million people.

Costs for the most popular plans (see chart below) continue to increase by more than 10 percent, and are slightly higher than the trends reported in Buck's previous survey, conducted in late 2007.

Type of Plan Buck's National Health Care Trend

19th Survey 18th Survey Difference

Preferred Provider Organization (PPO) 11.1% 10.7% +0.4%

Point-of-service (POS) 10.8 10.5 +0.3

Health Maintenance Organization (HMO) 11.1 11.1 -

High Deductible Consumer Driven 10.7 10.4 +0.3

Health insurers reported an average prescription drug trend of 11.4 percent, down slightly from the 11.7 percent reported in the prior survey. This is considerably higher than the 7.8 percent reported by pharmacy benefit managers (who generally do not take any underwriting risk).

For plans that supplement Medicare, health insurers reported a projected increase of 6.9 percent excluding prescription drug coverage. This lower trend reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and copays.

The survey also reported trend factors for dental and vision plans.

"While trends have come down significantly since 2003, they still remain stubbornly high," said Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey. "We are concerned that these trends may not yet reflect the impact of recent inflationary increases, which may put additional cost pressure on health care providers to raise their fees."

Health insurers use trend factors to calculate premium rates, and large self-funded employers use these trend factors to budget their future health care costs. In general, trend factors provide for price increases that may result from such variables as inflation, utilization of services, technology, changes in the mix of services, and mandated benefits.

Buck Consultants, an ACS company, is a leader in human resource and benefits consulting with more than 1,500 professionals worldwide. Founded in 1916 to advise clients in establishing and funding some of the nation's first public and private retirement programs, Buck is an innovator in the areas of retirement benefits, health and welfare programs, human capital management, and employee communication. News and other information about Buck Consultants are available at http://www.buckconsultants.com. Buck is an independent subsidiary of Affiliated Computer Services, Inc.

ACS, a global FORTUNE 500 company with 65,000 people supporting client operations reaching more than 100 countries, provides business process outsourcing and information technology solutions to world-class commercial and government clients. The company's Class A common stock trades on the New York Stock Exchange under the symbol "ACS." Learn more about ACS at http://www.acs-inc.com.

Buck's 19th "National Health Care Trend Survey" is available to the media by contacting Ed Gadowski at 201-902-2825. It is available to other interested parties for $100 from Buck's Global Survey Resources, 500 Plaza Drive, Secaucus, NJ, 07096-1533. Telephone 800-887-0509. It also can be ordered online at http://www.bucksurveys.com.


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SOURCE Affiliated Computer Services, Inc.
Copyright©2008 PR Newswire.
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