Benefits.....Opinion, Hearsay & News Review
An SHRM member study found
that the number of employers offering life insurance dipped from 92% in 2009 to
87% in 2010. LTD insurance was offered by 76% of employers and STD was offered
by 71% of those surveyed. Disability figures were not surveyed the year before.
There has been no appreciable change in the number of employers offering medical
and dental insurance. A Principal study of workplace wellness found that 43% of
employees surveyed said that participating in a wellness program inspires them
to perform better at work. Seventy-eight percent of employers surveyed by the
BLS said they believe their employees are either very happy or somewhat happy
with the benefits they provided.
Maine has received a 3 year
waiver from PPACA that required insurers to spend at least 80% of premiums on
patient care. Maine said the rule would destabilize the market for individual
insurance after one carrier (Mega Life-which has 37% of the market) threatened
to pull out of Maine if the rules were enforced. Mega Life is 77% owned by the
Blackstone Group and Goldman Sachs, so you can read just about anything into the
decision. KY, NV and NH have also applied for waivers. The irony of Harry
Reid’s state application is not lost upon us.
Workers have apparently
responded to the recession by filing less disability claims. STD claims declined
by 17.3% and LTD claims dropped 26%. While the cost per claim for STD also
declined by 15.9%, the cost per claim for LTD jumped by more than 25%.
PPACA puts new restrictions on
terminations of employees. Retroactive terminations are not allowed if the
member was covered through plan error and paid premium towards the cost.
However, retroactive terminations are allowed if the employee didn’t
contribute towards the cost of coverage.
A fall 2010 SHRM survey is
bleak. Employee wages were frozen by 39% of employers. Thirty-eight percent cut
employee bonuses, 20% reduced benefits and 36% implemented layoffs. A Towers/NBGH
survey says that employers expect employee health benefit costs to increase 7%
this year (after plan design changes) with PPACA exacerbating the cost trend. In
fact, 81% of employers reported PPACA has already increased the burden on their
HR departments. Although 53% of those surveyed had CDHPs in place, 27% plan to
begin offering CDHPs in 2012. The GAO found that RX prices for a basket of the
most commonly used brand and generic drugs increased by 6.6% each year between
2006 and 2010. Brand drugs alone increased by 8.3% annually.
Walgreens is selling their PBM
to Catalyst Health Solutions for $525M.
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WSJ reports more unintended
consequences of PPACA. Since over the counter RX is not allowed in Flex Spending
plans without a doctor’s prescription, employees are making unnecessary doctor
appointments to get their prescriptions for over the counter drugs. A reminder
that this is the same law that was supposed to save money, which has now been
dubbed the Medicine Cabinet Tax.
Major health insurers saw
mixed results in 2010. Wellpoint, Aetna, Health Net and Coventry all had
revenues go down. UHC, Kaiser, Humana, Cigna and BCBSIL-TX-NM-OK (HCSC) saw
revenue increases. Net income increased for all except Wellpoint and Kaiser.
Those” non-profit” HCSC plans saw the greatest increase by a long
shot-112.6%, while they shed 2.4 million members. Meanwhile, one of the greatest
enablers of the Blues to run roughshod over the market, Illinois Insurance
Director Michael McRaith, was chosen to head the new Federal Insurance Office
created by the Dodd-Frank law for Wall Street Reform and Consumer Protection
Act. (which will do neither). The Obama administration apparently thought he was
the perfect candidate after watching the non-protection of Illinois consumers.
The Joint Committee on
taxation measured the cost of the COBRA premium subsidy to the federal
government at $34 Billion!
The U.S. Supreme Court on
April 15 will convene a private conference to consider an appeal by Virginia for
an expedited review of a federal judge’s ruling that PPACA was
unconstitutional. Virginia is protesting that the ruling did not invalidate the
law or block its implementation.
Congressman John Fleming of
LA. notes the following regarding the effects of PPACA: In 19 states, parents
can no longer buy child only policies. 51% of American workers will lose their
current coverage by 2013. 6,578 new pages of regulations for implementation so
far. 1,270 new IRS bureaucrats requested this year for implementation. CBO
estimated 800,000 jobs that will be lost. $2,100 increase in individual
insurance premiums according to CBO vs. $2,500 in premium reductions promised by
candidate Obama.7.4Million reduction in Medicare Advantage enrollment (raising
costs). $118B new costs imposed on states. $310.8B projected medical cost
increases. $552.2 B in higher taxes if the law remains in place. $1.39 Trillion
in federal spending on new entitlements from 2012-2021 according to CBO.
Note: the Early Retiree
Reinsurance Program will run out of the $5 B allocated in 2011 of 2012.