FEHBP carriers are furiously preparing their 2015 benefit and rate proposals which are due later this week. Against this backdrop,
- Buck Consultants projects that cost increases for all types of medical plans are anticipated to be down by between 0.1 and 0.5 percent in 2014.
- Milliman released its 2014 Medical Index (MMI) which had similar findings:
As measured by the 2014 MMI, the total annual cost of healthcare for a typical family of four covered by an employer-sponsored preferred provider plan (PPO) is $23,215 (see Figure 1). Key observations are:Of course the outlier is specialty drug costs. Reuters reviews insurer efforts to control those costs. The Wall Street Journal reported today that a large Blue Cross insurer Wellpoint is planning to reward oncologists with a $350 payment for each patient maintained on an Anthem approved (not developed) treatment protocol or pathway. "The new WellPoint payments are supposed to ensure that 'best drugs and best protocols will be compensated,' said Sam Nussbaum, the insurer's chief medical officer. 'We're creating revenue neutrality so better care can be given.'"
- The MMI has more than doubled over the past 10 years (107% increase from 2004 to 2014), growing from $11,192 in 2004 to $23,215 in 2014.
- Although healthcare costs continue to rise, the overall annual rate of increase in the cost of care for the family of four is at its lowest level since we first calculated the MMI in 2002. During those years, the annual increase in cost ranged from a high of 10.1%, in both 2003 and 2004, to a low of 5.4% in 2014. The rate of increase dropped by nearly a full percentage point, from 6.3% in 2013 to 5.4% in 2014. As discussed later in this report, this significant decline was likely due to a confluence of forces rather than any single event.
- In almost every year of the past 10, growth rates have decelerated. Figure 2 shows the most recent five years of that deceleration.
- In each of the past four years, employees have assumed an increasing percentage of the total cost of care. The total employee cost (payroll deductions plus out-of-pocket expenses) increased by approximately 32% from 2010 to 2014, while employer costs (premium contributions) increased by 26%.