Deutsche Bank has released its annual employer health benefits survey, which projects 2012 commercial healthcare premiums to rise 7.2%, down from an increase of 8.2% in 2011. That’s a lower rate of increase (for both years) than found in other surveys; however, the direction is the same: a slowdown. After benefit design changes, premiums will rise 6.8% in 2012, Deutsche Bank projects, indicating buydowns of 320 basis points.
All of which could put pressure on health plan profits in 2012. Deutsche Bank projects that the spread between pricing and costs will tighten to 50 basis points in 2012, compared to 190 basis points in 2011. In other words, health insurance will be a riskier business next year will less room for error.
Based on the findings, Deutsche Bank has downgraded Coventry and Health Net shares to sell from buy, “given their higher exposure to the Commercial risk market.” Deutsche Bank continues to rate as buys Aetna, Amerigroup, Cigna, Magellan, UnitedHealth and WellPoint.
Deutsche Bank surveyed 432 self-insured and fully funded employers offering 628 unique plans.
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