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Health Plans Expect 8.2% Increase in Premiums for 2007

October 11, 2006

Philadelphia. October 11, 2006. Health plans nationwide report that premium rate increases in 2007 will be 8.2%, 0.2 percentage points lower than last year.  Before buy-downs, premium rate increases are expected to be 10.4% down from 11.1% last year. We estimate that the difference between before and after buy-down rate increases implies an 18.6% increase in employee contribution for 2007.

Plans report that they expect a 0.4 percentage point increase in the proportion of premiums to be spent on health benefits.  We estimate that this corresponds to a medical trend of 8.7% on average.

Previous Sherlock Company surveys have proven reliable. Last year’s projection of 8.4% corresponded to Kaiser Family Foundation’s recently released poll of actual increases of 7.7% after buy-downs.

The East South Central region, including Alabama, Kentucky, Missouri and Tennessee, had the highest rate of increase in premiums and medical trends. The West South Central region, including Arkansas, Louisiana, Oklahoma and Texas showed the lowest trends.

Sherlock Company’s eleventh annual health plan pricing survey comprises the results of 72 health plans, representing 20.6% of the 350 non-Medicaid independent, system and Blue Cross Blue Shield health plans. Results were for all forms of insured products.

Additional information concerning the Twelfth Annual Health Plan Pricing Survey is available from Sherlock Company.


Douglas B. Sherlock, CFA
Sherlock Company

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