October 2007

Rate of health-premium growth declines

Health plans are expecting premium rate increases in 2008 of 7.4 percent — 0.8 percentage points lower than last year’s expectation of 8.2 percent. This is the fourth consecutive decline in the rate of premium growth.

The information is based on Sherlock Company’s 13th Annual Health Plan Pricing Survey, which was conducted in September. The survey contained 76 responses, comprising 20.7 percent of health plans serving commercial members nationwide.

In addition, the survey notes the East-South-Central region is expected to have the highest premium rate increases, while the Pacific region is expected to have the lowest.

Also, the survey indicates plans expect to post increases before buy-downs of 9.4 percent, down from 10.4 percent in 2007. This implies an increase in consumer cost sharing of 16.2 percent. Health benefit ratios are expected to increase on average by 0.5 percentage points, and health care costs are expected to increase by 8 percent.

Additional information concerning the survey is available on the Sherlock Company Web site, www.sherlockco.com.

Source: Sherlock Company, www.sherlockco.com

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