Carrier Trend Report

Key findings from our 2019 Carrier Trend Survey

Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Medical and Pharmacy Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Medical Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Medical Trends – Percentiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Medical Trends – Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Pharmacy Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pharmacy Trends – Percentiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Employer-Realized Cost Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Employer Trend Mitigation Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trend Rate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
About This Survey Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Companies Providing Trend Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Introduction
Aon is pleased to present the results of its 2019 survey of leading health care carriers in the United
States. The survey was conducted among 91 carriers that offer medical, pharmacy, dental and/
or vision benefits. The survey responses reflect the carriers’ predicted increase in claims costs for
renewals occurring in 2019 and are intended to assist in evaluating insurance premium renewals.
The trend rates presented from the carrier survey in this report do not include any allowances for
potential employer countermeasures such as cost-containment plan amendments or the impact of
any attendant employer negotiations with carriers. Additionally, the survey reported cost increases
do not include the impact of the Affordable Care Act’s tax changes—in particular, the ACA’s 2019
tax holiday for insurers. For renewals initiated in 2019 for the 2020 plan year, we expect insurers to
increase premiums to reflect the reinstatement of the ACA’s health insurer tax in 2020. The impact of
the increase in the renewal due to this tax is not included in these trend rates.
Aon has conducted this survey to assist companies in:
• Evaluating health care renewals
• Understanding the factors that are driving medical cost increases
• Devising cost-containment initiatives to respond to the increasing costs
The trend rate figures shown in this report represent the percentage increases in medical plan
(insured and self-insured) costs that are anticipated to be required to address projected price inflation,
technology advances in the medical field, plan utilization patterns, and cost shifting from public to
commercial payors.
Comparing the most recent trend results to Aon’s prior survey (2018), medical and pharmacy (Rx)
trend expectations have decreased slightly and are the lowest in 10 years. Based on carrier responses,
forecasted trends for renewals initiated in 201 9 are roughly 0.5%–1.0% lower than trends in our
prior survey for most major plan types. Notably, the specialty pharmacy trend expectation decreased
significantly from the prior survey. Carriers indicate that lower unit cost trends continue to be the
major underlying driver, and more carriers expect that utilization increases will be higher compared to
prior years’ experience.
In terms of medical trends by service categories (inpatient, outpatient, and professional), carriers
expect outpatient costs to have the highest trend increase, followed by inpatient and professional.
The overall health care trend expectations continue to be well above general inflation and remain
critically and unsustainably high for employers and employees if no countermeasures are taken.
Pharmacy trends continue to vary widely by carriers and pharmacy benefit managers (PBMs).
Additionally, projected pharmacy trends are significantly higher than realized trends reported by
many carriers.
Many employers remain highly focused on managing year-to-year cost increases. To their advantage,
the current market dynamics and opportunities have accelerated innovation. Employers have greater
opportunity to adopt technology and data driven analytics to make smarter decisions about networks,
payments, and delivery systems for health care providers and pharmacy benefits. Regulatory
changes also play a role, as the uninsured population dropped after the Affordable Care Act was
implemented, which may have reduced cost shifting due to uncompensated care (and therefore
lowered Commercial trends). With the repeal of the individual mandate on the federal level in 2019,
and the resulting decrease in public exchange enrollment, it remains to be seen how realized trends
will be affected.
1
Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Medical and Pharmacy Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Medical Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Medical Trends – Percentiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Medical Trends – Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Pharmacy Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Pharmacy Trends – Percentiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Employer-Realized Cost Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Employer Trend Mitigation Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Trend Rate History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
About This Survey Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Companies Providing Trend Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Introduction
Aon is pleased to present the results of its 2019 survey of leading health care carriers in the United
States. The survey was conducted among 91 carriers that offer medical, pharmacy, dental and/
or vision benefits. The survey responses reflect the carriers’ predicted increase in claims costs for
renewals occurring in 2019 and are intended to assist in evaluating insurance premium renewals.
The trend rates presented from the carrier survey in this report do not include any allowances for
potential employer countermeasures such as cost-containment plan amendments or the impact of
any attendant employer negotiations with carriers. Additionally, the survey reported cost increases
do not include the impact of the Affordable Care Act’s tax changes—in particular, the ACA’s 2019
tax holiday for insurers. For renewals initiated in 2019 for the 2020 plan year, we expect insurers to
increase premiums to reflect the reinstatement of the ACA’s health insurer tax in 2020. The impact of
the increase in the renewal due to this tax is not included in these trend rates.
Aon has conducted this survey to assist companies in:
• Evaluating health care renewals
• Understanding the factors that are driving medical cost increases
• Devising cost-containment initiatives to respond to the increasing costs
The trend rate figures shown in this report represent the percentage increases in medical plan
(insured and self-insured) costs that are anticipated to be required to address projected price inflation,
technology advances in the medical field, plan utilization patterns, and cost shifting from public to
commercial payors.
Comparing the most recent trend results to Aon’s prior survey (2018), medical and pharmacy (Rx)
trend expectations have decreased slightly and are the lowest in 10 years. Based on carrier responses,
forecasted trends for renewals initiated in 201 9 are roughly 0.5%–1.0% lower than trends in our
prior survey for most major plan types. Notably, the specialty pharmacy trend expectation decreased
significantly from the prior survey. Carriers indicate that lower unit cost trends continue to be the
major underlying driver, and more carriers expect that utilization increases will be higher compared to
prior years’ experience.
In terms of medical trends by service categories (inpatient, outpatient, and professional), carriers
expect outpatient costs to have the highest trend increase, followed by inpatient and professional.
The overall health care trend expectations continue to be well above general inflation and remain
critically and unsustainably high for employers and employees if no countermeasures are taken.
Pharmacy trends continue to vary widely by carriers and pharmacy benefit managers (PBMs).
Additionally, projected pharmacy trends are significantly higher than realized trends reported by
many carriers.
Many employers remain highly focused on managing year-to-year cost increases. To their advantage,
the current market dynamics and opportunities have accelerated innovation. Employers have greater
opportunity to adopt technology and data driven analytics to make smarter decisions about networks,
payments, and delivery systems for health care providers and pharmacy benefits. Regulatory
changes also play a role, as the uninsured population dropped after the Affordable Care Act was
implemented, which may have reduced cost shifting due to uncompensated care (and therefore
lowered Commercial trends). With the repeal of the individual mandate on the federal level in 2019,
and the resulting decrease in public exchange enrollment, it remains to be seen how realized trends
will be affected.
1
 Medical and Pharmacy Trends Medical Trends

The purpose of this report is to provide risk managers and financial leaders of health care systems in Carriers are reporting lower expected trends across all products for 2019 when compared to 2018.
the United States with a data-supported tool to help them better understand medical cost trends. PPO and HMO plans have the lowest trends at under 7.0% while trends for HDHP and POS plans are
slightly higher.
For 2019, most carriers dropped their expected cost increases compared to 2018. The reported
trends for 2019 renewals were the lowest in past 10 years, but similar to the 2015 reported
anticipated trends. Medical-only cost trends are expected to drop from 7.4% to 7.0%, and
combined medical and Rx trends are expected to fall from 8.1% to 7.5%.
2018 2019
10.0%
9.0%
9.0%
Overall Medical and Rx Trend 8.2%
8.0% 7.6% 7.3% 7.5% 7.3% 7.4%
7.2% 7.0% 7.0%
6.9% 6.9%
Medical & RX 7.0%
Medical Only 6.0%
12%
5.0%

10% 4.0%
3.0%
8% 2.0%
1.0%
6% 0.0%
HMO PPO POS Indemnity HDHP Total
4%

2% PPO, or “preferred provider organization” plans, allow participants to visit any in-network physician or
health care provider without requiring a referral from a primary care physician. PPO plans are likely to
make significant payments to providers based on fee-for-service (FFS) arrangements.
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 HMO, or “health maintenance organization” plans, require a “gatekeeper” or primary care physician to
manage all health care services. HMOs typically include significant capitation, which is fixed payments
to providers regardless of utilization of services. Only services delivered in the provider network are
covered.

What is “trend”? POS, or “point of service” plans, are a type of managed care plan that is a hybrid of HMO and PPO plans.
Like an HMO, participants designate an in-network physician to be their primary care provider. But like a
PPO, patients may go outside the provider network for health care services.
The trend rate figures shown above represent carriers’ estimated annual increase in per-person costs without
any changes in plan design, vendor, or networks. Key drivers of medical and pharmacy trend include price
Indemnity plans allow participants to access health care from any doctor or hospital.
inflation, technology advances, plan utilization patterns, and cost shifting.

CDHPs, or “consumer directed health plans,” are a subset of health insurance arrangements in which
Price inflation has been a key driver of medical cost while new specialty drugs drive pharmacy trends.
individuals have an IRS-qualified high deductible health (HDHP) plan coupled with a tax-advantaged
Technological advances continue to create new opportunities for treatments of illnesses such as cancer that
health savings account they can use to pay health care expenses not covered by insurance.
were unavailable just a few short years ago.

2 2019 Aon Carrier Trend Report

3
 Medical and Pharmacy Trends Medical Trends

The purpose of this report is to provide risk managers and financial leaders of health care systems in Carriers are reporting lower expected trends across all products for 2019 when compared to 2018.
the United States with a data-supported tool to help them better understand medical cost trends. PPO and HMO plans have the lowest trends at under 7.0% while trends for HDHP and POS plans are
slightly higher.
For 2019, most carriers dropped their expected cost increases compared to 2018. The reported
trends for 2019 renewals were the lowest in past 10 years, but similar to the 2015 reported
anticipated trends. Medical-only cost trends are expected to drop from 7.4% to 7.0%, and
combined medical and Rx trends are expected to fall from 8.1% to 7.5%.
2018 2019
10.0%
9.0%
9.0%
Overall Medical and Rx Trend 8.2%
8.0% 7.6% 7.3% 7.5% 7.3% 7.4%
7.2% 7.0% 7.0%
6.9% 6.9%
Medical & RX 7.0%
Medical Only 6.0%
12%
5.0%

10% 4.0%
3.0%
8% 2.0%
1.0%
6% 0.0%
HMO PPO POS Indemnity HDHP Total
4%

2% PPO, or “preferred provider organization” plans, allow participants to visit any in-network physician or
health care provider without requiring a referral from a primary care physician. PPO plans are likely to
make significant payments to providers based on fee-for-service (FFS) arrangements.
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 HMO, or “health maintenance organization” plans, require a “gatekeeper” or primary care physician to
manage all health care services. HMOs typically include significant capitation, which is fixed payments
to providers regardless of utilization of services. Only services delivered in the provider network are
covered.

What is “trend”? POS, or “point of service” plans, are a type of managed care plan that is a hybrid of HMO and PPO plans.
Like an HMO, participants designate an in-network physician to be their primary care provider. But like a
PPO, patients may go outside the provider network for health care services.
The trend rate figures shown above represent carriers’ estimated annual increase in per-person costs without
any changes in plan design, vendor, or networks. Key drivers of medical and pharmacy trend include price
Indemnity plans allow participants to access health care from any doctor or hospital.
inflation, technology advances, plan utilization patterns, and cost shifting.

CDHPs, or “consumer directed health plans,” are a subset of health insurance arrangements in which
Price inflation has been a key driver of medical cost while new specialty drugs drive pharmacy trends.
individuals have an IRS-qualified high deductible health (HDHP) plan coupled with a tax-advantaged
Technological advances continue to create new opportunities for treatments of illnesses such as cancer that
health savings account they can use to pay health care expenses not covered by insurance.
were unavailable just a few short years ago.

2 2019 Aon Carrier Trend Report

3
 Medical Trends – Percentiles Medical Trends – Drivers

While the average medical increase for renewals in 2019 is 7.0% when weighted by enrollment,
there is a significant differential in the reported trend rates by carrier. The following chart illustrates
the range of reported trends. The median reported trend by all carriers is 7.0% and fifty percent of
carriers, report trends between 5.8% and 8.7%. The bottom quartile of carriers reports trends
between 4.5% and 5.8%.
As part of our survey, we asked carriers to estimate the drivers in each component of medical and
pharmacy cost trends. Similar to historical norms, carriers continue to expect price trends to be
consistent at 3.7%, but they project an increase in utilization going forward. While utilization has
been flat to negative over the last five years, a future increase will most likely be felt by most
employers

Medical Trend by Quartiles Plan design leveraging

8.0% occurs when cost sharing
elements (Copays,
7.0% Plan Deductibles, etc.) are not
Design increased with medical
6.0% 54%
inflation each year
62%
13.0% 5.0%
Percentile Utilization of services
12.0% Utilization has been relatively flat in
95 th 4.0%
11.0% recently
10.0% 3.0% Price and mix of services
9.0% 75th have been the main
8.0% 2.0% Price Mix driver46%
of increases in
medical costs over the
7.0% 1.0% last few years
50 th
6.0%
5.0% 0.0%
4.0% 25th Medical/RX
Trend
3.0% 5th
2.0% Carriers also report trends by the type and place of service. The chart below summarizes the place
1.0% of service trends. We note that while overall trends reported by carrier is close to 7.0%, the place of

0.0% service trends are below this except for outpatient services.
HMO PPO POS Indemnity CDHP Overall
Trend by Place of Service

Average Maximum Minimum

14.0%
Medical Trend HMO PPO POS Indemnity CDHP Overall
5th % 3.3% 4.1% 4.3% 5.1% 4.4% 4.5% 12.0%
25th % 6.0% 5.4% 6.2% 6.0% 5.4% 5.8%
10.0%
50th % 7.3% 6.6% 7.2% 6.6% 7.0% 7.3%
75th % 8.0% 8.6% 8.1% 10.9% 8.6% 8.7% 8.0% 7.2%
95th % 9.6% 10.0% 9.7% 12.1% 9.5% 9.9% 5.6%
6.0% 5.2%
4.8%
4.0%

2.0%

0.0%
Inpatient Outpatient Professional Ancillary

Outpatient trends continue to be outpace trends in other categories. The range in trends by type of
service is significant, ranging from close to 0% to over 10% for professional services

4 2019 Aon Carrier Trend Report

5
 Medical Trends – Percentiles Medical Trends – Drivers

While the average medical increase for renewals in 2019 is 7.0% when weighted by enrollment,
there is a significant differential in the reported trend rates by carrier. The following chart illustrates
the range of reported trends. The median reported trend by all carriers is 7.0% and fifty percent of
carriers, report trends between 5.8% and 8.7%. The bottom quartile of carriers reports trends
between 4.5% and 5.8%.
As part of our survey, we asked carriers to estimate the drivers in each component of medical and
pharmacy cost trends. Similar to historical norms, carriers continue to expect price trends to be
consistent at 3.7%, but they project an increase in utilization going forward. While utilization has
been flat to negative over the last five years, a future increase will most likely be felt by most
employers

Medical Trend by Quartiles Plan design leveraging

8.0% occurs when cost sharing
elements (Copays,
7.0% Plan Deductibles, etc.) are not
Design increased with medical
6.0% 54%
inflation each year
62%
13.0% 5.0%
Percentile Utilization of services
12.0% Utilization has been relatively flat in
95 th 4.0%
11.0% recently
10.0% 3.0% Price and mix of services
9.0% 75th have been the main
8.0% 2.0% Price Mix driver46%
of increases in
medical costs over the
7.0% 1.0% last few years
50 th
6.0%
5.0% 0.0%
4.0% 25th Medical/RX
Trend
3.0% 5th
2.0% Carriers also report trends by the type and place of service. The chart below summarizes the place
1.0% of service trends. We note that while overall trends reported by carrier is close to 7.0%, the place of

0.0% service trends are below this except for outpatient services.
HMO PPO POS Indemnity CDHP Overall
Trend by Place of Service

Average Maximum Minimum

14.0%
Medical Trend HMO PPO POS Indemnity CDHP Overall
5th % 3.3% 4.1% 4.3% 5.1% 4.4% 4.5% 12.0%
25th % 6.0% 5.4% 6.2% 6.0% 5.4% 5.8%
10.0%
50th % 7.3% 6.6% 7.2% 6.6% 7.0% 7.3%
75th % 8.0% 8.6% 8.1% 10.9% 8.6% 8.7% 8.0% 7.2%
95th % 9.6% 10.0% 9.7% 12.1% 9.5% 9.9% 5.6%
6.0% 5.2%
4.8%
4.0%

2.0%

0.0%
Inpatient Outpatient Professional Ancillary

Outpatient trends continue to be outpace trends in other categories. The range in trends by type of
service is significant, ranging from close to 0% to over 10% for professional services

4 2019 Aon Carrier Trend Report

5
 Pharmacy Trends Pharmacy Trends - Percentiles

Pharmacy trends continue to moderate from their peak. Overall pharmacy trends have dipped The average pharmacy increase for renewals in 2019 is 10% for all drugs when weighted by
slightly, but they are still over 9%, and the overall specialty drug trends continue to be over 14%. enrollment. There is significant variance in the reported trend rates by carrier. The following chart
illustrates the range of reports by carrier. The median reported trend by all carriers is 10.0% and
Pharmacy Trend fifty percent of carriers, report trends between 7.8% and 10.8%. The bottom quartile of carriers
reports trends between 5.0% and 7.8%.
Total Rx Specialty Rx
25% Pharmacy Trends

20%

30.0%
15% Percentile
25.0% 95th
54%
10% 62%
20.0%
75th

15.0%
5%
50 th
10.0%

0%
5.0% 46% 25th
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 38%
5th
0.0% 14%
Observations
Potential unmanaged employer pharmacy costs continue to be unsustainable. Even though the -5.0%
specialty drug cost trend expectation has come down from 23% in 2015 to 14% in 2019, it is still Specialty Non-Specialty Total Pharmacy
double digits and currently specialty drugs represent close to 50% of drug cost. Pharmaceutical
manufacturer strategies are designed to drive product sales and keep members on higher-cost
brand drugs. Further consolidation in the pharmacy benefit management industry has resulted in Specialty Non-Specialty Total Pharmacy
three major players with 75% of the total U.S. market. The result is that many employers feel like
5th % 5.2% -1.0% 5.0%
small fish in the large PBM pond, with little clout and not enough visibility into PBM practices.
25th % 10.4% 0.2% 7.8%
Combating these market dynamics are employers banding together to gain purchasing scale 50th % 15.0% 5.0% 10.0%
through pharmacy group purchasing coalitions. The Aon Rx Coalition (ARxC) now represents
75th % 17.0% 6.7% 10.8%
almost 400 clients with over 2.4 million members and more than $3B in drug spend. By joining a
95th % 25.3% 15.0% 13.2%
purchasing coalition such as the ARxC, employers gain improved purchasing power with leading
PBMs that they cannot get on their own. They also benefit from the Aon “managed competition”
approach of offering three PBM choices, which allows them to select a PBM based on factors
beyond just pricing. The 2019 Market Check is estimated to save on average 7% over 2018 pricing
across our clients participating in the coalition.

6 2019 Aon Carrier Trend Report

7
 Pharmacy Trends Pharmacy Trends - Percentiles

Pharmacy trends continue to moderate from their peak. Overall pharmacy trends have dipped The average pharmacy increase for renewals in 2019 is 10% for all drugs when weighted by
slightly, but they are still over 9%, and the overall specialty drug trends continue to be over 14%. enrollment. There is significant variance in the reported trend rates by carrier. The following chart
illustrates the range of reports by carrier. The median reported trend by all carriers is 10.0% and
Pharmacy Trend fifty percent of carriers, report trends between 7.8% and 10.8%. The bottom quartile of carriers
reports trends between 5.0% and 7.8%.
Total Rx Specialty Rx
25% Pharmacy Trends

20%

30.0%
15% Percentile
25.0% 95th
54%
10% 62%
20.0%
75th

15.0%
5%
50 th
10.0%

0%
5.0% 46% 25th
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 38%
5th
0.0% 14%
Observations
Potential unmanaged employer pharmacy costs continue to be unsustainable. Even though the -5.0%
specialty drug cost trend expectation has come down from 23% in 2015 to 14% in 2019, it is still Specialty Non-Specialty Total Pharmacy
double digits and currently specialty drugs represent close to 50% of drug cost. Pharmaceutical
manufacturer strategies are designed to drive product sales and keep members on higher-cost
brand drugs. Further consolidation in the pharmacy benefit management industry has resulted in Specialty Non-Specialty Total Pharmacy
three major players with 75% of the total U.S. market. The result is that many employers feel like
5th % 5.2% -1.0% 5.0%
small fish in the large PBM pond, with little clout and not enough visibility into PBM practices.
25th % 10.4% 0.2% 7.8%
Combating these market dynamics are employers banding together to gain purchasing scale 50th % 15.0% 5.0% 10.0%
through pharmacy group purchasing coalitions. The Aon Rx Coalition (ARxC) now represents
75th % 17.0% 6.7% 10.8%
almost 400 clients with over 2.4 million members and more than $3B in drug spend. By joining a
95th % 25.3% 15.0% 13.2%
purchasing coalition such as the ARxC, employers gain improved purchasing power with leading
PBMs that they cannot get on their own. They also benefit from the Aon “managed competition”
approach of offering three PBM choices, which allows them to select a PBM based on factors
beyond just pricing. The 2019 Market Check is estimated to save on average 7% over 2018 pricing
across our clients participating in the coalition.

6 2019 Aon Carrier Trend Report

7
 Employer-Realized Cost Increases Employer Trend Mitigation Strategies

Employer’s realized costs increases will differ from the carriers used trends for a variety of reasons: As health care costs continue to outpace general inflation, employers can seize on three
opportunities to accomplish the triple aim – improved cost, improved quality, improved experience:

Plan Design Changes
Vendor Optimization
Cost Management
Programs
Wellness Initiatives
Network Optimization
Underwriting Margins
Changes in cost sharing elements including copays, deductibles,
and coinsurance
Changes to vendors that presumably will lower costs
Services such as prior authorization, medical management, and
utilization management programs
Improvements in the overall health and productivity of the
population
Changes in networks including narrowing, ACOs, and other
strategies
Carriers may include provisions against adverse deviations as they
are projecting trends compared to measuring actual experience
Plans Change the way health care is delivered to employees through
adaptive plan design elements that steer patients for better cost
and quality care.
Navigation Employees need help navigating the health care system and
the choices offered to them. New opportunities include live
and digital navigation, expert opinion services and immersive
care management programs.
Care Enhance the support and programs available to improve the
population’s health utilizing strategies such as immersive care
management and lifestyle management programs with enhanced
wellbeing focus.

Administrative Fees Included in actual employer premiums but not in carrier

expectations
Utilization Carriers expect higher increases in utilization of services than has
been realized recently Lowering cost, improving quality and the employer experience, requires focus on optimizing
provider performance and enhancing consumerism through expanded personalization and choice:

Aon’s Health Value Initiative (HVI) database is the largest analysis of actual employer-based health
plan results of its kind. The data captures health care cost and benefit data for over 497 large U.S.
employers representing 10.9 million participants, more than 1,260 plans and $62.5 billion in 2018 Optimal Provider Enhanced Consumerism Through Expanded Personalization
Performance and Value Adaptive Design and Experience and Choice
health care spend. The database indicates that employers experience a much lower cost increase
over time when compared to expected trend rates from carriers. Some of the many different reasons Accountable Care Exchanges and Defined
Provider Quality Transparency
Organizations Contribution
are highlighted above.
Centers of Excellence/
Expert Second Opinions Total Rewards Flex Models
Expertise
Aon Employer Benchmarking
Payment Reform Next-Gen, Value-Based Design Elective Benefits
HVI Carrier Expectations Physician Quality Advocacy & Concierge Programs Life Planning Accounts

12.0% Dynamic Portals &

Clinical Navigation Additional LTD Protection
Communication

10.0% Primary Care Optimization Effective Plan Design Architecture Personal Enrollment Support
8.8% 8.7% 8.8%
8.4% 8.1%
7.5% 7.5%
8.0%

6.0%
4.4%
3.9% 3.6% 3.6%
4.0% 3.3% 3.2% 3.1%

2.0%

0.0%
2013 2014 2015 2016 2017 2018 2019 (proj.)

8 2019 Aon Carrier Trend Report

9
 Employer-Realized Cost Increases Employer Trend Mitigation Strategies

Employer’s realized costs increases will differ from the carriers used trends for a variety of reasons: As health care costs continue to outpace general inflation, employers can seize on three
opportunities to accomplish the triple aim – improved cost, improved quality, improved experience:

Plan Design Changes
Vendor Optimization
Cost Management
Programs
Wellness Initiatives
Network Optimization
Underwriting Margins
Changes in cost sharing elements including copays, deductibles,
and coinsurance
Changes to vendors that presumably will lower costs
Services such as prior authorization, medical management, and
utilization management programs
Improvements in the overall health and productivity of the
population
Changes in networks including narrowing, ACOs, and other
strategies
Carriers may include provisions against adverse deviations as they
are projecting trends compared to measuring actual experience
Plans Change the way health care is delivered to employees through
adaptive plan design elements that steer patients for better cost
and quality care.
Navigation Employees need help navigating the health care system and
the choices offered to them. New opportunities include live
and digital navigation, expert opinion services and immersive
care management programs.
Care Enhance the support and programs available to improve the
population’s health utilizing strategies such as immersive care
management and lifestyle management programs with enhanced
wellbeing focus.

Administrative Fees Included in actual employer premiums but not in carrier

expectations
Utilization Carriers expect higher increases in utilization of services than has
been realized recently Lowering cost, improving quality and the employer experience, requires focus on optimizing
provider performance and enhancing consumerism through expanded personalization and choice:

Aon’s Health Value Initiative (HVI) database is the largest analysis of actual employer-based health
plan results of its kind. The data captures health care cost and benefit data for over 497 large U.S.
employers representing 10.9 million participants, more than 1,260 plans and $62.5 billion in 2018 Optimal Provider Enhanced Consumerism Through Expanded Personalization
Performance and Value Adaptive Design and Experience and Choice
health care spend. The database indicates that employers experience a much lower cost increase
over time when compared to expected trend rates from carriers. Some of the many different reasons Accountable Care Exchanges and Defined
Provider Quality Transparency
Organizations Contribution
are highlighted above.
Centers of Excellence/
Expert Second Opinions Total Rewards Flex Models
Expertise
Aon Employer Benchmarking
Payment Reform Next-Gen, Value-Based Design Elective Benefits
HVI Carrier Expectations Physician Quality Advocacy & Concierge Programs Life Planning Accounts

12.0% Dynamic Portals &

Clinical Navigation Additional LTD Protection
Communication

10.0% Primary Care Optimization Effective Plan Design Architecture Personal Enrollment Support
8.8% 8.7% 8.8%
8.4% 8.1%
7.5% 7.5%
8.0%

6.0%
4.4%
3.9% 3.6% 3.6%
4.0% 3.3% 3.2% 3.1%

2.0%

0.0%
2013 2014 2015 2016 2017 2018 2019 (proj.)

8 2019 Aon Carrier Trend Report

9
 Trend Rate History About This Survey Report

Trend Rate Overview

Plan Type 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Medical—Actives and Retirees < Age 65 (With Rx) The trend rates shown in this report represent national averages and are the predicted increases in
HMO 10.5% 9.8% 8.8% 8.2% 7.9% 7.1% 8.1% 8.7% 8.2% 7.4% claims cost. Trend increases for a specific company may vary significantly from these trend rates due
to regional cost variations, company plan design, company demographics, and other factors. In
PPO 10.7% 9.9% 9.2% 9.0% 9.0% 7.6% 8.4% 8.8% 8.0% 7.5%
addition, insured rate increases may be higher or lower than these trend rates based on an
POS 10.6% 10.0% 9.1% 8.4% 8.7% 7.6% 8.2% 8.5% 8.1% 7.7% insurance company’s profitability, the plan’s claims loss ratio, the plan design, insured
Indemnity 12.4% 10.1% 9.7% 9.2% 10.2% 8.8% 9.6% 10.4% 9.4% 8.6% demographics, and other factors. It is important to note that these trend rates might not be
appropriate for use in many cases. Consultants should consider their specific client circumstances in
CDHP 11.0% 9.7% 9.0% 8.6% 7.7% 7.0% 8.5% 8.6% 8.0% 7.5%
selecting the appropriate trend rate. For example, standards such as ASC 715-60 and Actuarial
Total 10.7% 9.9% 9.1% 8.8% 8.7% 7.5% 8.4% 8.8% 8.1% 7.5% Standards of Practice might dictate the use of alternative trend rate assumptions.

These trend rates include the following components:

Medical—Actives and Retirees < Age 65 (Without Rx)

HMO 10.8% 10.1% 9.0% 8.3% 8.3% 6.8% 6.3% 7.8% 7.6% 6.9% • Price inflation—Price inflation is the average increase in the cost of goods and services of health
care providers for medical, prescription drug, dental, and vision.
PPO 10.9% 10.0% 9.4% 9.0% 9.0% 7.0% 7.3% 7.5% 7.3% 6.9%

POS 10.9% 10.3% 9.4% 8.6% 8.5% 6.9% 7.0% 7.6% 7.5% 7.2% • Fixed-dollar leveraging—Fixed-dollar leveraging is the cost added to a health plan by the
subtraction of unchanging deductibles, copays, or out-of-pocket maximums from a trended
Indemnity 12.8% 10.5% 9.8% 9.3% 10.1% 8.3% 8.3% 8.6% 9.0% 8.2%
claim amount. To illustrate this with an example, suppose a claim of $5,000 increases by 10%
CDHP 11.1% 9.8% 9.5% 8.8% 8.3% 6.9% 7.7% 7.6% 7.3% 7.0% in the next year to $5,500 and a plan has a $500 deductible that remains fixed. The net plan
Total 10.9% 10.0% 9.4% 8.9% 8.8% 7.0% 7.2% 7.6% 7.4% 7.0% cost in this case increases from $4,500 to $5,000, or by a net trend of 11%. The fixed-dollar
leveraging leads to the difference between the 11% and the 10%. Fixed-dollar leveraging has a
significantly larger impact on CDH plans than on other plan types.
Medical—Retirees Age 65+ (With Rx)
Medicare Supplement 7.5% 6.5% 5.5% 4.3% 4.2% 3.0% 4.3% 4.8% 4.5% 4.5% • Utilization—This is the increase in the number of medical procedures performed in response to
an aging population, new medical techniques, and more aggressive treatments of conditions.
Medicare Advantage 6.7% 6.1% 5.9% 4.5% 3.0% 2.8% 3.3% 3.1% 3.6% 3.8%
• Technological advances—This is the change in cost due to new procedures replacing old
procedures. Examples of technological advances include organ transplants, artificial organs,
Medical—Retirees Age 65+ (Without Rx)
diffusion tensor magnetic resonance imaging, therapeutic cloning, and positron-emission
Medicare Supplement 7.8% 6.4% 5.9% 4.3% 3.8% 2.5% 4.3% 4.1% 3.7% 4.0% tomography (PET) scans.
Medicare Advantage 6.3% 6.0% 5.8% 4.4% 2.8% 2.5% 2.5% 2.4% 3.5% 3.6%
• Cost shifting—This is an individual provider’s shifting of costs from fixed or discount payers
to reasonable and customary payers such as insurance companies or self-funded employers.
Pharmacy Discount payers include Medicare, Medicaid, and managed care plans.
General (Total) 8.4% 6.9% 6.5% 6.5% 6.3% 10.0% 12.5% 11.6% 10.2% 9.4%
Specialty 14.0% 14.5% 14.8% 16.6% 18.2% 22.7% 19.8% 18.6% 18.3% 14.1%

Dental

DHMO 4.2% 4.0% 4.0% 4.1% 4.3% 3.9% 3.5% 3.4% 3.8% 3.4%
PPO 6.0% 5.4% 5.0% 4.5% 4.9% 4.7% 4.1% 4.0% 3.8% 3.5%
Indemnity 6.8% 6.0% 5.5% 5.6% 5.7% 5.7% 4.0% 3.8% 3.8% 4.3%

Vision 2.9% 3.6% 3.7% 3.5% 2.5% 2.5% 2.9% 3.0% 2.9% 2.2%

10 2019 Aon Carrier Trend Report

11
 Trend Rate History About This Survey Report

Trend Rate Overview

Plan Type 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Medical—Actives and Retirees < Age 65 (With Rx) The trend rates shown in this report represent national averages and are the predicted increases in
HMO 10.5% 9.8% 8.8% 8.2% 7.9% 7.1% 8.1% 8.7% 8.2% 7.4% claims cost. Trend increases for a specific company may vary significantly from these trend rates due
to regional cost variations, company plan design, company demographics, and other factors. In
PPO 10.7% 9.9% 9.2% 9.0% 9.0% 7.6% 8.4% 8.8% 8.0% 7.5%
addition, insured rate increases may be higher or lower than these trend rates based on an
POS 10.6% 10.0% 9.1% 8.4% 8.7% 7.6% 8.2% 8.5% 8.1% 7.7% insurance company’s profitability, the plan’s claims loss ratio, the plan design, insured
Indemnity 12.4% 10.1% 9.7% 9.2% 10.2% 8.8% 9.6% 10.4% 9.4% 8.6% demographics, and other factors. It is important to note that these trend rates might not be
appropriate for use in many cases. Consultants should consider their specific client circumstances in
CDHP 11.0% 9.7% 9.0% 8.6% 7.7% 7.0% 8.5% 8.6% 8.0% 7.5%
selecting the appropriate trend rate. For example, standards such as ASC 715-60 and Actuarial
Total 10.7% 9.9% 9.1% 8.8% 8.7% 7.5% 8.4% 8.8% 8.1% 7.5% Standards of Practice might dictate the use of alternative trend rate assumptions.

These trend rates include the following components:

Medical—Actives and Retirees < Age 65 (Without Rx)

HMO 10.8% 10.1% 9.0% 8.3% 8.3% 6.8% 6.3% 7.8% 7.6% 6.9% • Price inflation—Price inflation is the average increase in the cost of goods and services of health
care providers for medical, prescription drug, dental, and vision.
PPO 10.9% 10.0% 9.4% 9.0% 9.0% 7.0% 7.3% 7.5% 7.3% 6.9%

POS 10.9% 10.3% 9.4% 8.6% 8.5% 6.9% 7.0% 7.6% 7.5% 7.2% • Fixed-dollar leveraging—Fixed-dollar leveraging is the cost added to a health plan by the
subtraction of unchanging deductibles, copays, or out-of-pocket maximums from a trended
Indemnity 12.8% 10.5% 9.8% 9.3% 10.1% 8.3% 8.3% 8.6% 9.0% 8.2%
claim amount. To illustrate this with an example, suppose a claim of $5,000 increases by 10%
CDHP 11.1% 9.8% 9.5% 8.8% 8.3% 6.9% 7.7% 7.6% 7.3% 7.0% in the next year to $5,500 and a plan has a $500 deductible that remains fixed. The net plan
Total 10.9% 10.0% 9.4% 8.9% 8.8% 7.0% 7.2% 7.6% 7.4% 7.0% cost in this case increases from $4,500 to $5,000, or by a net trend of 11%. The fixed-dollar
leveraging leads to the difference between the 11% and the 10%. Fixed-dollar leveraging has a
significantly larger impact on CDH plans than on other plan types.
Medical—Retirees Age 65+ (With Rx)
Medicare Supplement 7.5% 6.5% 5.5% 4.3% 4.2% 3.0% 4.3% 4.8% 4.5% 4.5% • Utilization—This is the increase in the number of medical procedures performed in response to
an aging population, new medical techniques, and more aggressive treatments of conditions.
Medicare Advantage 6.7% 6.1% 5.9% 4.5% 3.0% 2.8% 3.3% 3.1% 3.6% 3.8%
• Technological advances—This is the change in cost due to new procedures replacing old
procedures. Examples of technological advances include organ transplants, artificial organs,
Medical—Retirees Age 65+ (Without Rx)
diffusion tensor magnetic resonance imaging, therapeutic cloning, and positron-emission
Medicare Supplement 7.8% 6.4% 5.9% 4.3% 3.8% 2.5% 4.3% 4.1% 3.7% 4.0% tomography (PET) scans.
Medicare Advantage 6.3% 6.0% 5.8% 4.4% 2.8% 2.5% 2.5% 2.4% 3.5% 3.6%
• Cost shifting—This is an individual provider’s shifting of costs from fixed or discount payers
to reasonable and customary payers such as insurance companies or self-funded employers.
Pharmacy Discount payers include Medicare, Medicaid, and managed care plans.
General (Total) 8.4% 6.9% 6.5% 6.5% 6.3% 10.0% 12.5% 11.6% 10.2% 9.4%
Specialty 14.0% 14.5% 14.8% 16.6% 18.2% 22.7% 19.8% 18.6% 18.3% 14.1%

Dental

DHMO 4.2% 4.0% 4.0% 4.1% 4.3% 3.9% 3.5% 3.4% 3.8% 3.4%
PPO 6.0% 5.4% 5.0% 4.5% 4.9% 4.7% 4.1% 4.0% 3.8% 3.5%
Indemnity 6.8% 6.0% 5.5% 5.6% 5.7% 5.7% 4.0% 3.8% 3.8% 4.3%

Vision 2.9% 3.6% 3.7% 3.5% 2.5% 2.5% 2.9% 3.0% 2.9% 2.2%

10 2019 Aon Carrier Trend Report

11
 Companies Providing Trend Data Contact Information

The following companies contributed to the Aon 2019 Health Care Trend Survey: Michael Morrow, FSA, MAAA
Senior Vice President and Health Analytics Leader
Aetna EyeMed Vision Care Aon Health & Benefits
Anthem BCBS United of Wisconsin Delta Dental of Alaska +1.303.782.3366
Anthem Blue Cross Delta Dental of Connecticut Michael.morrow@aon.com
Anthem Blue Cross and Blue Shield (Maine) Delta Dental of Idaho
Anthem Blue Cross and Blue Shield (Virginia) Delta Dental of Indiana
Stephen Caulk, FSA, MAAA
Anthem Blue Cross Blue Shield (Colorado) Delta Dental of Iowa Senior Vice President
Anthem Blue Cross Blue Shield (Nevada) Delta Dental of Michigan Aon Health Solutions
Anthem Blue Cross Blue Shield Indiana Delta Dental of Minnesota +1.303.782.3314
Anthem Blue Cross Blue Shield Kentucky Delta Dental of Missouri stephen.caulk@aon.com

Anthem Blue Cross Blue Shield Missouri Delta Dental of Nebraska

Anthem Blue Cross Blue Shield of Connecticut Delta Dental of New Jersey Carolyn Comeau, FSA, MAAA
Anthem Blue Cross Blue Shield of New Hampshire Delta Dental of Ohio Vice President
Anthem Blue Cross Blue Shield Ohio Delta Dental of Oregon Aon Health Solutions
+1.312.381.7215
Blue Cross and Blue Shield of Central New York Delta Dental of South Carolina
Carolyn.comeau@aon.com
Blue Cross and Blue Shield of Illinois Delta Dental of Virginia
Blue Cross and Blue Shield of Minnesota Delta Dental of WI
Blue Cross and Blue Shield of Montana Highmark—Davis Vision Myungki Suh, FSA, MAAA
Blue Cross and Blue Shield of New Mexico Highmark—UCCI Assistant Vice President
Aon Health Solutions
Blue Cross and Blue Shield of North Carolina Highmark BCBS—Western Pennsylvania
+1.312.381.4927
Blue Cross and Blue Shield of Oklahoma Highmark BCBS Delaware
Myungki.suh@aon.com
Blue Cross and Blue Shield of Tennessee Highmark BCBS West Virginia
Blue Cross and Blue Shield of the Rochester Area Highmark BS—Central Pennsylvania
Blue Cross and Blue Shield of Utica-Watertown Humana
Blue Cross and Blue Shield of Western New York Independence Blue Cross
Blue Cross Blue Shield of Alabama Medica
Blue Cross Blue Shield of Arizona MetLife
Blue Cross Blue Shield of Georgia Northeast Delta Dental - Maine, New Hampshire,
Blue Cross Blue Shield of Massachusetts Vermont
Blue Cross Blue Shield of Michigan Optima Health Plan
Blue Cross Blue Shield of Texas Prime Therapeutics
Blue Cross of California Regence Blue Cross Blue Shield of Oregon
Blue Shield of California Regence Blue Cross Blue Shield of Utah
Capital Blue Cross Regence Blue Shield
CareFirst Blue Cross Blue Shield (DC/MD) Regence Blue Shield of Idaho
CIGNA Health Insurance UnitedHealthcare
Davis Vision Univ. of Pittsburgh Medical Center Health Plan
Empire Blue Cross Blue Shield New York Vision Service Plan
Express Scripts 17 other companies

12 2019 Aon Carrier Trend Report

13
 Companies Providing Trend Data Contact Information

The following companies contributed to the Aon 2019 Health Care Trend Survey: Michael Morrow, FSA, MAAA
Senior Vice President and Health Analytics Leader
Aetna EyeMed Vision Care Aon Health & Benefits
Anthem BCBS United of Wisconsin Delta Dental of Alaska +1.303.782.3366
Anthem Blue Cross Delta Dental of Connecticut Michael.morrow@aon.com
Anthem Blue Cross and Blue Shield (Maine) Delta Dental of Idaho
Anthem Blue Cross and Blue Shield (Virginia) Delta Dental of Indiana
Stephen Caulk, FSA, MAAA
Anthem Blue Cross Blue Shield (Colorado) Delta Dental of Iowa Senior Vice President
Anthem Blue Cross Blue Shield (Nevada) Delta Dental of Michigan Aon Health Solutions
Anthem Blue Cross Blue Shield Indiana Delta Dental of Minnesota +1.303.782.3314
Anthem Blue Cross Blue Shield Kentucky Delta Dental of Missouri stephen.caulk@aon.com

Anthem Blue Cross Blue Shield Missouri Delta Dental of Nebraska

Anthem Blue Cross Blue Shield of Connecticut Delta Dental of New Jersey Carolyn Comeau, FSA, MAAA
Anthem Blue Cross Blue Shield of New Hampshire Delta Dental of Ohio Vice President
Anthem Blue Cross Blue Shield Ohio Delta Dental of Oregon Aon Health Solutions
+1.312.381.7215
Blue Cross and Blue Shield of Central New York Delta Dental of South Carolina
Carolyn.comeau@aon.com
Blue Cross and Blue Shield of Illinois Delta Dental of Virginia
Blue Cross and Blue Shield of Minnesota Delta Dental of WI
Blue Cross and Blue Shield of Montana Highmark—Davis Vision Myungki Suh, FSA, MAAA
Blue Cross and Blue Shield of New Mexico Highmark—UCCI Assistant Vice President
Aon Health Solutions
Blue Cross and Blue Shield of North Carolina Highmark BCBS—Western Pennsylvania
+1.312.381.4927
Blue Cross and Blue Shield of Oklahoma Highmark BCBS Delaware
Myungki.suh@aon.com
Blue Cross and Blue Shield of Tennessee Highmark BCBS West Virginia
Blue Cross and Blue Shield of the Rochester Area Highmark BS—Central Pennsylvania
Blue Cross and Blue Shield of Utica-Watertown Humana
Blue Cross and Blue Shield of Western New York Independence Blue Cross
Blue Cross Blue Shield of Alabama Medica
Blue Cross Blue Shield of Arizona MetLife
Blue Cross Blue Shield of Georgia Northeast Delta Dental - Maine, New Hampshire,
Blue Cross Blue Shield of Massachusetts Vermont
Blue Cross Blue Shield of Michigan Optima Health Plan
Blue Cross Blue Shield of Texas Prime Therapeutics
Blue Cross of California Regence Blue Cross Blue Shield of Oregon
Blue Shield of California Regence Blue Cross Blue Shield of Utah
Capital Blue Cross Regence Blue Shield
CareFirst Blue Cross Blue Shield (DC/MD) Regence Blue Shield of Idaho
CIGNA Health Insurance UnitedHealthcare
Davis Vision Univ. of Pittsburgh Medical Center Health Plan
Empire Blue Cross Blue Shield New York Vision Service Plan
Express Scripts 17 other companies

12 2019 Aon Carrier Trend Report

13
About Aon
Aon plc (NYSE:AON) is a leading global professional ser-
vices firm providing a broad range of risk, retirement and
health solutions. Our 50,000 colleagues in 120 countries
empower results for clients by using proprietary data
and analytics to deliver insights that reduce volatility and
improve performance.

© Aon plc 2019. All rights reserved.

The information contained herein and the statements expressed are of a
general nature and are not intended to address the circumstances of any
particular individual or entity. Although we endeavor to provide accurate
and timely information and use sources we consider reliable, there can be
no guarantee that such information is accurate as of the date it is received
or that it will continue to be accurate in the future. No one should act on
such information without appropriate professional advice after a thorough
examination of the particular situation.

www.aon.com

GDM07565