Private medical insurance providers have been accused of failing to pass on falling medical costs to...
Private medical insurance providers have been accused of failing to pass on falling medical costs to employers, with charges increasing way above inflation, according to research from Mercer Human Resource Consulting.
The pay and benefit consultant claimed that while inflation on corporate health plan costs fell to an average of just 3% last year - the lowest for more than two decades - many insurers are still applying inflation rates of as much as 10% to the calculation of companies' annual healthcare premiums.
According to Mercer, medical inflation has fallen because medical and technological developments have pushed down the price of some treatments, insurers are managing provider costs more effectively and the number of people making claims has levelled off. However, the consultancy said that many insurers have yet to build these factors into the assumptions they use to determine their prices.
"Low medical inflation means employers could benefit considerably from reviewing the cost of their health plans, particularly when negotiating renewal terms," said Stephen Clements, principal at Mercer.
Mercer questioned, however, whether this low inflation is sustainable in the long term - especially with the introduction of new and expensive drugs such as Herceptin - but insisted a jump from 3% to 10% is still unlikely to occur within the next few years.
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