U.S. Office of Personnel Management - Ensuring the Federal Government has an effective civilian workforce

Industry Trends—

• The latest national survey of health insurance trends is drearily familiar. Employers face another year of double-digit increases -- 12.7 percent in 2002. (Washington Post, September 6, 2002.)
• Trends are up over last year. The Kaiser Family Foundation and the Health Research and Educational Trust recently announced the results of their annual survey of employers and reported that premiums for employer-sponsored health insurance rose an average 12.7 percent in 2002 (Washington Post, September 6, 2002).
• Nationwide, studies project that insurance premiums will climb by 13 percent in 2002 year and HMO rates could increase by as much as 20 percent (Washington Post, July 9, 2002).
• Milliman USA’s annual HMO inter-company rate survey indicates average increases of 17 percent for the nation and 19 percent for the South-Atlantic region, which includes Maryland, Virginia, and the District of Columbia. The sharply higher costs could lead many employers to offer fewer health plans, reduce what they cover, or shift more costs to employees (New York Times, April 18, 2002).
• Rates of the California Public Employees Retirement System (CalPERS), the second-largest purchaser of health benefits after the FEHBP, will rise about 25 percent (Sacramento Bee, April 17, 2002). CalPERS announced that basic rates will increase 22.1% for PERSCare and 18.9% for PERS Choice.  Medicare rates will increase 5.9 percent for PERSCare and 5.1 percent for PERS Choice. The increase will be 25.1 percent for HMOs. Using FEHBP's distribution, that would be 18.7% on average.
• Among those predicting 20-to-25 percent hikes for 2003 are HMOs recently surveyed by the benefits consultancy Hewitt Associates. (Medicine & Health Perspectives, June 17, 2002) "Preliminary 2003 HMO rates are averaging upward of 20 percent," said Hewitt in a June 4 release. According to preliminary estimates from Mercer Human Resource Consulting, companies will probably face average increase of 12 to 15 percent in 2003, compared with a projected increase of 12.7 percent in 2002. The New York Times article "Hard Decisions for Employers as Costs Soar in Health Care" (April 18, 2002), the steep increases could lead many employers to shift a greater proportion of health care costs to their workers and we’re going to see a huge spike in the number of uninsured.