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

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

Email : jseiler@ssbenefits.net                                               http://www.ssbenefits.net/   April 2008 Issue

As the Presidential candidates talk about the issues, nearly 10,000 health care consumers were surveyed by Quality Health.com. 51% said they would pay more taxes and 49% said they would not pay more taxes to ensure everyone in the country could have access to health care. Of those that would pay more, 31% said they’d pay 5% more and 17% said they’d pay up to 10% more. We are not sure if this is in addition to the portion of premiums that they are already paying.

N.Y. AG Andrew Cuomo has now subpoenaed several health insurance companies in his probe of an alleged scheme by the insurers to defraud consumers by manipulating reimbursement rates for out of network claims. For some reason he is focused on payments for the small number of physicians that do not participate in networks and who generally charge more than double what Medicare pays. One wonders if there is some ulterior motive similar to that of his $4,000 a night predecessor, but perhaps that is a bit unfair?

Nippon Life has purchased $413.3 M of stock in Principal Financial Group, raising its stake to 7% of the company. Nippon offers health insurance coverage using Principal’s back office for claim payment.

Express Scripts says greater generic drug use saved an estimated $5.2B for commercially insured Americans during 2007. The average cost per Rx rose from $53.25 to $54.34. Total spending on Rx grew 4.7% from 2006 with per member (not employee) per year spending increasing to $798.76 (excluding Medicaid and Medicare).

According to the American Association of Preferred Provider Plans, CDHP enrollment grew 25% from 10M to 12.5M from 2006 to 2007. 97% of those plans have a PPO component. Meanwhile, an EBRI survey says that only 2.3M adults are in actual CDHP plans while 12.5 M were in a high deductible health plan (HDHP). Of those in CDHP’s, they were more likely to have higher incomes and less health problems and also were more likely to skip medications or medical care due to cost. However, they were more likely to talk with doctors about treatment plans and to use generic drugs. Those in CDHP and HDHP plans were less likely to be satisfied with those plans than those consumers in more comprehensive plans. A Milliman survey of 30,000 employees enrolled in CDHP plans says that CDHPs are creating 1.5% savings for employers after factoring in the increased costs for those who remain in other plans offered. BCBS of MN reports its CDHP members seek 11% less ER care and had an 11% decrease in Rx usage, while using 12% more preventive care than other members.

Wellpoint slashed its 2008 profit forecast in early March, driving down the cost of health insurance stocks. However, Aetna affirmed their outlook for growth. Humana also slashed its outlook based on higher than expected (Oh really?)Medicare Rx claims, which is not the first time they’ve been in trouble in the Medicare market. In the meantime, Humana has agreed to buy OSF Healthplans in Peoria , IL . Cigna completed its acquisition of Great-West Healthcare. South suburban Chicago St.Francis Hospital has announced it’s closing due to financial troubles.

The DOL reports that employer costs for employee compensation of private industry workers averaged $26.42 per hour as of 12/07. Of that, wages and salary were $18.67. Legally required benefits (SS, Medicare, unemployment and workers comp) cost $2.22, other insurance cost $2.01, paid leave cost $1.79, retirement and savings cost $0.95 and supplemental pay cost $0.79…which adds to one cent more than the overall average.

The CBO estimated that ½ of the growth in health spending over the last several decades is attributed to advances in medical technology. 3% was due to the aging of the population. Also, consumer’s out of pocket costs have fallen from 52%  of costs in 1965 to 15% in 2005. Rising prices for non-technology related costs accounted for 20% of the cumulative increase in costs. Another study by the Conference Board says that obesity costs private employers $45B a year and is associated with a 36% increase in healthcare spending, more than smoking or alcoholism. They say 34% of Americans fit the definition of obesity.

Get ready for more cost shifting as Senate Democrats are poised to unveil a Medicare package with a 10.6% physician reimbursement cut.

In Maine , they are trying to pass a bill to pay for their under-funded program to help the uninsured which has yet to yield substantiated savings promises made 5 years ago when the program began. Plans are to raise cigarette taxes and add a 1.8% tax on all medical claims paid by private insurers, thereby raising the costs for those who have insurance. If the 1.8% tax passes, does anyone expect an ERISA challenge?