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S&S Benefits.....Opinion, Hearsay & News Review

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S&S Benefits Consulting 219 Darien, Dundee, IL 60118 Phone: 847-428-5353, Fax:847-428-9876,

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Volume 2 Issue 2-Street Talk April, 2000 Issue

ITís no secret that Rx is a driving force in health cost increases. A recent study by MEDSTAT and Protocare Sciences sites volume and not price for the increased costs from 1994 to 1997. On average, volume increases outweighed price increases by 5 to 1. New science and better medical practices identifying the chronically ill and appropriate treatment seem to be to blame.

ON another front, in a move aimed at cost containment, UHC is requiring some members who use anti-depressant medications to buy larger pills to be split in half to get their daily dose. Drugs involved include Zoloft, Paxil and Celexa. According to UHC the change lowers UHC costs from $70.20 to $36.15 for a 30 day prescription of Zoloft.

TAx savings is driving enrollments into section 132 plans that pay for transportation. In Chicago, the number of employers in transit plans through the RTA has increased by more than 650 in the last two years. Same as section 125, the employer enjoys tax savings along with employees.

WEllpoint offered to buy Aetna U.S. Healthcare and Aetna declined. Aetna announced a restructuring aimed at improving profitability. In the meantime, A.M. Best put Aetna under review concerning the companyís financial situation. Employers who are on our e-mail distribution list were the first to know of these developments from our special news alerts.

SPending on health in the public sector as a share of the total is decelerating for the first time since 1988. The HCFA says that the slower growth is due to Medicare fraud control and payment controls required by the 1997 Balanced Budget Act. We think this is better known as cost shifting to the private sector as providers try to make up their losses from Medicare.

THe IRS has ruled that retirees cannot make pretax contributions from their pension benefits to pay for health coverage offered through their former employerís flex plans.

REtirees also lost a court ruling involving Sears, Roebuck. Sears reduced retiree life benefits for about 65% of their retirees and will eliminate retiree life benefits for future retirees. The court ruled that Sears had reserved the right to change their plan as part of their SPD.

CLarifications have also been issued by the IRS that will allow flex plans to be more liberal regarding mid-year changes. The final regulations finally update 1984, 1989 and 1997 rules. They also say that a strike or lockout are considered a change in status allowing an employee to revoke a prior benefit election! Employees can also change their dependent care elections if a change occurs in price or if care is no longer needed. E-mail us if you would like the full text from the March 23 Federal Register.

AEtna has said it will end coverage of bone marrow transplants for women with breast cancer. Other HMOís are expect to follow suit. Apparently the research for this treatment was flawed and outcomes were not positive.

DOctors want to unionize and a House bill sponsoring the right to collectively bargain has made it through committee. The CBO has said the bill would raise costs by 2.6%. There is no companion bill in the Senate now.

WIsconsin and Minnesota have sued the federal government for unfair reimbursements for Medicare risk HMOís. Reimbursements seem to favor high cost areas and have limited growth of the product in rural areas.

WYatt says that health care costs are jumping by an average of 9.7% this year led by a 10% jump in HMO prices. The survey included 503 employers Most (57%) are absorbing the increase. TP surveyed 228 primarily Fortune 1000 companies and predicted slightly higher increases and a 6% increase in dental costs.

BC\BS has had the Texas insurance department approve their purchase of NYLCare Health Plans in TX from Aetna, which was the main part of what appears to have been a bad deal by Aetna to acquire NYLCare.

SIx insurers (Cigna, Aetna, Wellpoint, Foundation, Oxford and Pacificare) are developing a joint website to make it easier for consumers to use their products. They hope to block competition in their territory in cyberspace from Healtheon/WebMD.

S&S Benefits Consulting is a partnership of benefits professionals with over 50 years in the health and welfare business. We specialize in the group business and donít try to sell you services where we have no expertise. If you need professional advice or an impartial analysis we are here to assist you. If we canít help you, chances are, we know who can.