Is Medical Trend 11% Or Is It Really 3.9%?

A recent article  in Busuness Insurance gained our immediate interest. The lead sentence seems at odds with what insurance companies are telling consumers:

“Government researchers and private experts say the weak economy, the rapid rise of generic drugs and lower-cost treatment alternatives are major reasons why total U.S. health care spending increased a modest 3.9% “

Recent group insurance renewals we have reviewed use trend factors averaging 11%. So if medical inflation is really only 3.9%, why are insurance companies using a rate that three times higher?

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