Employer Health Costs Grow at the Slowest Rate of Last Five Years at 4.6%
Moderate Cost Increases Expected to Continue Through 2013
Ann Arbor, MI – September 18, 2012 — With key provisions of the Patient Protection and Affordable Care Act (PPACA) now in effect for over a year, Truven Health Analytics, formerly the Healthcare business of Thomson Reuters, has assembled a compendium of data tracking the impacts of reform and other industry trends on employer healthcare costs. The new report, US Employer Benchmarks and Trends, uses real-world insurance claims data for 340 large U.S. employers representing 18.3 million covered lives to track healthcare costs over the past five years and project costs for 2012 and 2013.
According to the report, medical and pharmacy costs for employees and their dependents from 2010 to 2011 increased at a rate of 4.6 percent, the smallest increase in annual employer healthcare costs over the last five years. The research also projects that allowed amounts will continue to grow at a moderate rate of 4 to 5 percent in 2012 and 2013.
The relatively modest 2011 cost trend of 4.6 percent reflects the impact of PPACA and Mental Health Parity regulations effective in 2011. Following is an overview of some of the key facts highlighted in the new report:
- Extension of Dependent Coverage: The extension of dependent coverage through age 26 for unmarried children accounted for 1.4 percent of the overall 4.6 percent increase in employer healthcare costs. The lower-than-average healthcare costs for individuals age 19-26 beginning coverage in 2011 had the effect of reducing overall average per member costs by 0.2 percent.
- Preventive Services Coverage: The PPACA requirement to cover more preventive services has resulted in a 3.8 percent increase in physician’s office visits for preventive care. This modest increase may be reflective of the generous preventive coverage offered by many large employers prior to PPACA.
- Mental Health Parity Regulations: Roughly 0.4 percent of the 4.6 percent 2011 healthcare cost trend was driven by an increase of 13.7 percent in Mental Health and Substance Abuse services due to the Mental Health Parity and Addiction Equity Act of 2008.
Additional data covered in the report includes: the impact of pay-or-play strategies on employer healthcare costs, branded and generic prescription drug trends, consumer-driven health plan cost trends, costs on an industry-by-industry basis, and dental cost trends.
“In this period of enormous fluctuation in both healthcare and the broader economy, timely and appropriate benchmark comparisons are essential to identifying areas for program intervention, measuring progress, and providing decision makers with appropriate context for program performance,” said Chris Justice, the paper’s lead author and senior director of practice leadership, Truven Health Analytics. “Employers, insurers, and plan administrators who are able to take a data-driven approach to managing population health and productivity can make their benefit programs sustainable in the current market.”
Data for the report were compiled from the Truven Health MarketScan® Research Databases, which provide fully integrated, anonymous, individual-level healthcare claims data that reflect real-world treatment patterns and costs.
For more information on the paper, please visit http://interest.truvenhealth.com/forms/EMP-LP201208MarketScanNormsBook
About Truven Health AnalyticsSM
Truven Health Analytics, formerly the Healthcare business of Thomson Reuters, delivers unbiased information, analytic tools, benchmarks, and services to the healthcare industry. Hospitals, government agencies, employers, health plans, clinicians, and pharmaceutical and medical device companies have relied on us for more than 30 years. We combine our deep clinical, financial, and healthcare management expertise with innovative technology platforms and information assets to make healthcare better by collaborating with our customers to uncover and realize opportunities for improving quality, efficiency, and outcomes. With more than 2,000 employees globally, we have major offices in Ann Arbor, Mich.; Chicago; and Denver. Advantage Suite, Micromedex, ActionOI, MarketScan, and 100 Top Hospitals are registered trademarks or trademarks of Truven Health Analytics. For more information, please visit truvenhealth.com.