New Study Projects Health Care Costs to Increase More Slowly

NEW YORK, May 15, 2014 – Projected cost increases for all types of medical plans are anticipated to be down by between 0.1 and 0.5 percent in 2014, according to a survey by Buck Consultants, A Xerox Company (NYSE: XRX). This continues the favorable trend of slow, steady declines generally experienced since 2010.

In a national survey of 126 insurers and administrators, Buck measured the projected average annual increase in employer-provided health care benefit costs. Insurers and administrators providing medical trends for the survey cover a total of approximately 119 million people.

In its 28th National Health Care Trend Survey, Buck found costs are projected to increase at rates that are lower than its recent prior surveys.

Type of Plan: Preferred Provider Organization (PPO)
28th Survey: 8.7%
27th Survey: 9.0%
26th Survey: 9.2%

Type of Plan: Point-of-Service (POS)
28th Survey: 8.5%
27th Survey: 8.8%
26th Survey: 9.0%

Type of Plan: Health Maintenance Organization (HMO)
28th Survey: 8.6%
27th Survey: 8.7%
26th Survey: 8.8%

Type of Plan: High Deductible Health Plan (HDHP)
28th Survey: 8.6%
27th Survey: 9.1%
26th Survey: 9.1%:

Some survey respondents cited reduced utilization as the primary reason for the decrease.

“This may be a result of the economic slowdown and its impact on consumers’ willingness to seek medical treatment,” said Harvey Sobel, FSA, a Buck principal and consulting actuary who co-authored the survey. “Even though the decline is good news, most plan sponsors still find 8-9 percent cost increases unsustainable.”

Health insurers reported an average prescription drug trend of 9.2 percent, a decrease of 0.7 percent from the prior survey. On the other hand, pharmacy benefit managers, who generally do not take any underwriting risk, reported a weighted average trend factor of 4.1% – less than half of the factor reported by health insurers – but still up by 0.3% from the 3.8% reported in the prior survey.

For plans that supplement Medicare, health insurers reported a trend of 5.5 percent excluding prescription drug coverage, up from 4.1 percent in the prior survey. Medicare Supplement plans generally have lower trends than other medical plans due to the impact of federal controls on Medicare fees and the smaller increases expected in Medicare deductibles and copays.

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

“It’s too soon to tell the impact of public and private health exchanges on trend,” said Daniel Levin, FSA, a Buck principal and consulting actuary, who co-authored the survey. “It may take another few years before we really know if (and by how much) the exchanges will “bend” the cost curve.”

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.

About the Survey
Buck’s 28th “National Health Care Trend Survey” is available at no cost to the media by contacting Ed Gadowski at or +1-910-253-9816. It is available to other interested parties for $100 by visiting

About Buck Consultants
Buck Consultants, A Xerox 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, talent and human resources solutions, compensation, and employee communication. News and other information about Buck Consultants are available at

About Xerox
Since the invention of Xerography more than 75 years ago, the people of Xerox (NYSE: XRX) have helped businesses simplify the way work gets done. Today, we are the global leader in business process and document management, helping organizations of any size be more efficient so they can focus on their real business. Headquartered in Norwalk, Conn., more than 140,000 Xerox employees serve clients in 180 countries, providing business services, printing equipment and software for commercial and government organizations. Learn more at


Media Contacts:
Ed Gadowski, Buck Consultants, A Xerox Company, +1-910-253-9816,
Nicole Pavlas, Text 100 for Buck Consultants, +1-585-697-2620,

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