Trend is a forecast of per capita claim cost increases that take into account various factors, including price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology. Trend is the estimated increase in future healthcare costs.
Although there may be a high correlation between a trend and the actual cost increase assessed at renewal, trend and the net annual change in plan costs are not necessarily the same.
Other factors that impact renewals include, but are not limited to:
Price inflation could be impacted by:
Inflator: Convenience has a cost
Increases in the availability of health care, such as retail clinics and urgent care centers, has led to higher outpatient utilization. Even if higher use of these alternative sites reduces costs per visit, the savings may result in more of visits. Telemedicine has demonstrated that it can be a lower-cost option for non-emergent visits.
Inflator: Increased access for behavioral health & substance abuse
Behavioral health and substance abuse were once on the back burner of health treatments, but now a regulatory push and mainstream recognition of these issues will likely cause these issues to be a crucial part of an employer's health benefits. Also, COVID-19 and forced isolation could drive higher need and utilization of behavioral health services.
Inflator: Hospital and provider network consolidations
Throughout the United States, health care systems continue to consolidate under larger brands, which has influenced network negotiated reimbursement rates paid to providers. Reimbursement rates are projected to be higher for hospital networks than for physicians.
Inflator: Specialty drugs
Specialty drug costs are still trending in the double digits. Specialty Rx utilization has increased by approximately 2.2% over the last year. Additionally, specialty Rx accounts for 40% of new drugs being launched that include new drugs to treat cancer and orphan diseases and conditions
Deflator: Lower Cost Service Delivery Settings (Telehealth and Urgent Care)
Some employers are encouraging employees to consider lower cost care options like telemedicine and urgent care facilities. Expect to see more free-standing facilities and in-home benefits like telemedicine. Simultaneously, providers are taking steps to move people away from hospitals and other high-cost settings.
Deflator: Care advocacy
Some employers are offering employees new services that engage and guide consumers to better quality and lower-cost care. TriNet added HealthAdvocate in 2021.
Deflator: Mail order and home delivery of Rx
There are cost savings when mail order programs are used to fill scripts vs. using retail pharmacies. COVID-19 saw a modest increase in mail order and home delivery services, but even this modest increase resulted in realized plan cost savings.
Deflator: Biosimilar Medications
Biologics make up a good portion of specialty drugs. A biosimilar is a biologic drug that is similar to another biologic medication. After many years of research and development, several biosimilar products are expected to launch in 2023.
**This trend deflator is being followed closely for future cost reductions.
Companies can help bend their cost trends by educating worksite employees on:
*2022 Segal Health Plan Trend Survey