Title
Employee Health Insurance Renewal FY2025
History
Market Analysis
The Horton Group (Horton) conducted a competitive market analysis for health insurance and all benefit lines for the Village of Orland Park’s (VOP) 2025 plan year.
The results showed the Health Insurance market remains volatile due to higher hospital, provider, and pharmacy costs. In addition, patient risk has also escalated. There is greater use of specialty drugs which accounted for approximately 70% of the plan’s overall pharmacy spend. In addition, GLP-1 drug use (Ozempic, Mounjaro) has also increased for weight loss associated with diabetes. These drugs cost on average $1k per month and their use is ongoing. Yet to hit the VOP plan but concerning to underwriters for all plans are gene and cell therapy drugs, which have an average cost of $3M. They are considered cures for some conditions which were once untreatable. There are 19 cellular and 13 gene therapy treatments in the market today with 200+ in late-phase development.
Despite the market negatives, the VOP plan ran closer to target this year than last. Data through September ran 98.4% of expected. There are 20 large claimants over $50k, 5 over the $100k specific reinsurance limit. Mid-size claimants fell slightly to 28 from 31 but dropped in spending by $186,000.
The preliminary renewal was released with an overall spreadsheet increase of $528,007 or 9.24%. After negotiations and market comparisons, the best and final renewal came in at +$344,325 or 6.03%. As a comparison, Price Waterhouse Coopers (PWC) medical trend is projected to be 8% for 2025. Pharmacy trend is projected to be 10%.
In the process, Rx rebates were improved by 53% and included additional pass-through language unique for Horton clients if rebates turned out higher. There is no claw-back if rebates turn out lower. Also improved in negotiations was the stop-loss contract, Blue Cross has included a second layer of reinsurance for the gene and cell therapy...
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