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While medical premiums post their fourth year of double-digit growth, dental premiums have continued on a stable course.
According to the National Association of Dental Plans (NADP), the average increase for dental benefits during 2004 is expected to be 3.7% for dental health maintenance organizations (DHMOs), 6.5% for dental preferred provider organizations (PPOs) and 5.8% for indemnity products. (Figures represent employee-only group premiums for products with orthodontia.) These modest increases remain well below the trends in health insurance premiums.
By contrast, premiums for employer-sponsored health coverage increased an average of 11.2% in 2004. While this figure is less than the previous year's 13.9% increase, it is the fourth consecutive year of double-digit growth, according to the 2004 Annual Employer Health Benefits Survey released by the Kaiser Family Foundation and Health Research and Educational Trust (HRET).
LIMRA International and the NADP reported that dental insurance premiums accounted for approximately 0.5% of employee payroll in 2001, a figure that is expected to remain relatively stable in the coming year. Many employers cite this pricing stability as among dental benefit's most attractive attributes. They are finding it easier to continue spending on the popular benefit, which has been ranked by employees as their second favorite next to medical.
The stability in dental benefits pricing can be attributed to dental care's focus on preventive care and the industry's focus on cost management. The National Center for Health Statistics reports that every $1 spent on prevention saves $4 in treatment. In terms of cost management, the industry is making great strides - Delta Dental cost management and contractual agreements combined saved groups $3.7 billion in 2003.
Premium trends in 2005 are expected to be similar for DHMO, PPO and fee-for-service programs, although contributions made by employees are expected to increase. The employer's portion of dental contributions decreased to an average of 58% last year after an average of 61.8% in 2000. Meanwhile, employees paid 42% in 2004, up from 38% two years before. And employee-pay-all benefits continue gaining popularity among employers; about a quarter of PPOs, a third of DHMOs and dental discount plans, and two-thirds of indemnity plans were paid for entirely by employees.
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