From an actuary: “Medical cost trends include components for many drivers. Net unit price increases from providers drives half of the effect in general. So a 5% increase in a schedule will drive a 10% overall cost increase. The rest of the components include: increased utilization, coding creep, deductible leveraging, etc…”
Editor’s Note: Is this confirmation from an experienced actuary/underwriter that escalator clauses common to all Managed Care Contracts are the driving force behind trend factors?