Health plan medical trend was up a paltry 1.7% in 2010, the lowest rate in memory. On a per member – per month (PMPM) basis, medical trend was just barely above one percent, and by far the lowest rate seen over the last decade – and probably for many decades before
What’s driving the lower trend rate reported by Mark Farrah and Associates?
Among the contributors cited in the report were:
– increased cost sharing due to a higher percentage of insureds enrolled in high deductible plans, requiring insureds to fund the first several thousand of health expenses (many insureds don’t have the funds set aside to cover their deductible)
– a milder flu season
– reduction in reserves for prior year claims (health plans set aside too much money at the end of the last plan year to cover claims that were ‘incurred but not reported’ (IBNR))
– impact of the economy and employment-related issues.
The PMPM figure is by far the most significant – After a decade in which the lowest trend rate was 4.9%, and the average trend was almost 8%, 2010 saw medical trend dip below the overall CPI – an event so rare as to be unprecedented.
The good news is trend was way low last year. The bad news is medical costs PMPM are still up almost $100 from 2002 – 2010.
What does this mean for you?
re medical 2010 was a ‘good’ year – but a lot of that was because the economy was in the tank and people couldn’t afford care. As the economy improves, we’ll likely see trend held down because care is still unaffordable.
Sep
26
