Upfront: Health-Plan Cost Inflation To Slow in 2007

While the price of medical plan offerings will continue to rise in 2007, it will do so more slowly than it has in the past few years, according to research from The Segal Co., a benefits, compensation and human resources consulting firm based in New York City. Segal's annual health-plan cost trend survey analyzes projections from managed care organizations, health insurers, pharmacy benefit managers and third-party administrators.

The cost trend for retail prescription drug coverage has been in steep decline since 2003 and will continue to decelerate next year to around 12 percent. Price increases for this component will approximate those for medical coverage. Health management organization (HMO) plans are projected to cost 11 percent more next year. The rate increase for preferred provider organization (PPO) plans will be 11.6 percent, according to Segal.