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Buck Consultants Survey: Health Care Costs Projected to Increase at Double-Digit Levels

Thursday, November 29, 2007 General News J E 4
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NEW YORK, Nov. 28 Costs for the most popular types ofhealth care coverage are projected to increase at double-digit rates throughthe remainder of 2007 and into 2008, according to a national survey ofinsurers and administrators. The survey released today by Buck Consultants, anACS company and one of the world's leading human resource and benefitsconsulting firms, analyzed responses from 79 health insurers, HMOs, andthird-party administrators.

In its 18th National Health Care Trend Survey, Buck measured the projectedaverage annual increase in employer-provided health care benefit costs.Insurers providing medical trends for the survey cover a total ofapproximately 91 million people.

As the chart below indicates, costs for the most popular plans continue toincrease by more than 10 percent, similar to trends reported in Buck's 17thsurvey, conducted in early 2007.

Health insurers reported an average prescription drug trend of 11.68percent, up slightly from the 11.33 percent reported in the prior survey. Thisis considerably higher than the 4.52 percent reported by pharmacy benefitmanagers (who generally do not take any underwriting risk).

Health insurers reported lower trends for plans that supplement Medicare-- 7.32 percent for plans with drug coverage and 6.82 percent for planswithout. This reflects the impact of federal controls on Medicare fees and thelower increases expected in Medicare deductibles and co-pays.

The survey also reported trend factors for dental and vision plans.

"Insurers are concerned about the cost shifting to private employers thatmay result due to health care reform at the state level," said Harvey Sobel,FSA, a Buck principal and consulting actuary who directed the survey."Complying with federal and state mental health parity laws is also expectedto raise costs."

Health insurers use trend factors to calculate premium rates, and largeself-funded employers use these trend factors to budget their future healthcare costs. In general, trend factors provide for price increases that mayresult from such variables as inflation, utilization of services, technology,changes in the mix of services, and mandated benefits.

Buck Consultants, an ACS company, is a leader in human resource andbenefits consulting with more than 1,500 professionals worldwide. Founded in1916 to advise clients in establishing and funding some of the nation's firstpublic and private retirement programs, Buck is an innovator in the areas ofretirement benefits, health and productivity programs, talent management andrewards strategies, and employee communication. News and other informationabout Buck Consultants are available at http://www.buckconsultants.com. Buckis an independent subsidiary of Affiliated Computer Services, Inc.

ACS, a global FORTUNE 500 company with more than 62,000 people supportingclient operations in more than 100 countries, provides business processoutsourcing and information technology solutions to world-class commercial andgovernment clients. The company's Class A common stock trades on the New YorkStock Exchange under the symbol "ACS." ACS makes technology work. Visit ACS onthe Internet at http://www.acs-inc.com.-------------------------------------------------------------------------- Type of Plan Buck's National Health Care Trend Data -------------------------------------------------------------------------- 18th Survey 17th Survey Difference ----------- ----------- ---------- Preferred Provider Organization (PPO) 10.75% 10.60% +0.15% Point-of-service (POS) 10.54 10.56 -0.02 Health Maintenance Organization (HMO) 11.14 11.11 +0.03 High Deductible Consumer Driven 10.36 11.11 -0.75 ----
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