What is trend?

Health plan cost trend is the measure of increases in allowed per capita claims cost. Allowed per capita claims cost is eligible billed charges (before participant cost sharing) less provider discounts.

Multiple factors influence trend, including new treatments, therapies and technologies, medical price inflation, and provider cost shifting from reduced payment by Medicare and Medicaid, to name just a few.

Although there is usually a high correlation between a trend rate and the actual cost increase assessed by a carrier, trend and the net annual change in plan costs are not the same. A plan sponsor’s costs can be significantly different from projected claims cost trends.

Key health plan cost trend survey findings

In addition to the double-digit projected prescription drug trend noted above, key survey findings about the coming year’s trend projections include:

• Survey respondents project the per-person cost trend for PPO/POS plans to be 7.9 percent.
• Projected specialty drug trend is 13.3 percent. Drivers of projected specialty drug trend are primarily due to the utilization of new high-cost specialty drugs, replacing lower-cost therapies. Trend attributable to utilization is forecast to be 7.8 percent, accounting for almost 60 percent of the specialty drug gross cost trend increase before rebates.
• Unit cost, including factors like price inflation, is still the primary driver for inpatient hospital trends.
• Plan sponsor focus has shifted dramatically to cost- and quality-management strategies related to prescription drugs and weight loss-treatments specifically, which now account for four of the top five cost-management strategies.
• Trend projections for dental provider organizations are 4.5 percent.
• Projected vision trend is 3.0 percent for reasonable and customary plans.
• While the projected medical trend for Medicare-eligible retirees with Medicare Advantage PPO plans is 4.9 percent, the projected Medicare Part D trend is 8.9 percent.

Get the survey report

In addition to presenting trend projections and trend drivers, the report:

• Notes which factors are driving medical and prescription drug cost increases in 2025
• Covers how utilization and price affect trend
• Compares the top health plan cost-management strategies plan sponsors are using this year, as identified by the survey respondents, most of which focus on managing pharmacy benefit costs, to last year’s top five
• Actual allowed health cost trends for 2023 based on respondents' group health plan experience
• Actual 2023 data from Segal’s health data warehouse, SHAPE (Segal’s Health Analysis of Plan Experience), including how actual medical trends differ by site of service; the six chronic conditions that are risk factors for being a high-cost claimant with annual cost of $100,000 or more; the five cancer types driving cancer-related costs; mental health trend increasing faster than general medical trend; the five conditions that are the main drivers of mental health cost trends and much more
• Presents an overview of strategies for managing medical and pharmacy benefit costs in 2025 and beyond

It is vital for plan sponsors to monitor their actual health plan claims regularly to identify unanticipated cost drivers.

Plan sponsors in industries facing tight labor market conditions may be reluctant to pass on cost increases to participants. Effective cost-management strategies can help maintain reasonable trends and avoid having to require participants to share the burden of higher costs.

Our approach to healthcare cost management

We recommend a balanced, three-pronged approach to effective healthcare cost management. It involves managing plan design/networks, vendors and population health. Data analytics are central to supporting each of those cost-management strategies.