Costs Continue to Rise for Employee Health Benefits

Wells Fargo Insurance survey finds medical costs projected to increase in the high single digits in 2013

SAN FRANCISCO - September 25, 2012

In a finding that will likely not surprise many businesses in the U.S., the cost of claims in employer-sponsored health plans continues to rise, according to a survey from Wells Fargo Insurance. Although rates remain consistent compared to six months ago, the survey of more than 70 insurance companies nationwide found that overall claim costs will continue to increase in the high single digits next year. The Wells Fargo Insurance Employee Benefits Survey was conducted between July and August 2012.

“Despite ongoing efforts to control healthcare expenses the survey found that insurers are not expecting a drop in claim costs for 2013,” said Dan Gowen, senior vice president of Wells Fargo Insurance’s national Employee Benefits Practice. “This means that employer premiums will likely rise, and it’s also likely consumers may pay more for their share of employer-sponsored healthcare plans. Employers seeking to minimize cost increases should explore more sophisticated ways to maintain and improve the health risk of employees and maximize their benefit investment.”

The survey also found that dental cost trends are lower than medical trends due to lack of cost shifting from public to private plans, and a negative cost impact from improvements in the dental technology field. Finally, survey results indicate prescription costs are down slightly, due to greater availability and the use of generic drugs.

Wells Fargo Insurance has been conducting this biannual survey since 2008 to measure national healthcare trends. Reflecting claim activity over a six-month period, projected increases in the national average cost of claims include the following:

  • Health maintenance organizations (HMO) – 8.5 percent
  • Point-of-sale (POS) – 8.7 percent
  • Preferred provider organizations (PPO) and consumer driver health plans – 9.3 percent
  • Exclusive provider organizations (EPO) – 9.4 percent
  • Indemnity plans – 10.2 percent
  • Prescription plans – 7.6 percent

In addition to healthcare reform provisions, claim trends are influenced by price inflation or deflation (changes in unit prices for the same services), increased or decreased use of services, population age, leveraging effect on benefit design, changes in provider treatment patterns, improvements in technology and drug therapies, and cost shifting.

To help employers prepare for the impact of healthcare reform, Wells Fargo Insurance introduced the Health Care Reform Analyzer service. Combining innovative technology with access to a leading team of benefits compliance professionals, Wells Fargo Insurance can evaluate actual company data, apply current legislative requirements, and work with employers to develop an optimal benefits and compensation strategy based on financial objectives. For more information on Wells Fargo Insurance, visit

About Wells Fargo Insurance
Wells Fargo Insurance is the fifth largest insurance broker in the world (Business Insurance, 2012). With 160 offices in 36 states, Wells Fargo Insurance provides solutions for a wide range of customers, including retail consumers, high net worth individuals, small businesses, as well as middle market and large corporate customers. The 7,200 insurance professionals of Wells Fargo Insurance write $20 billion of risk premiums annually in property, casualty, benefits, international, personal lines, and life products.

About Wells Fargo & Company
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (, and has offices in more than 35 countries to support the bank’s customers who conduct business in the global economy. With approximately 265,000 full-time equivalent team members, Wells Fargo serves one in three households in United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2012 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

Katie Ellis