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

Why be like everyone else?

United Healthcare and Advocate Health Care in Chicago (Chicago’s largest hospital system) have been unable to make an agreement on reimbursements, leading Advocate to announce they are pulling out of United’s network effective October 15. Advocate wanted a reported 18% increase ($25Million). The pullout affects both doctors and all hospitals including such well known names as Lutheran General, Good Shepherd, Good Samaritan, Christ Hospital and the Dreyer Clinic. So for those with UHC in Chicago the question becomes affordability or access. Employers with employees in Aurora, IL, with Dreyer will be hard hit if this pullout becomes reality, due to few alternatives in the area.

One more market has been lost for individual insurance in 15 states. Conseco, which originally got in trouble with Greentree Financial lending money on mobile homes, has decided to pull out of the individual medical market. They may deny it, but 15 states (including Illinois) is most likely just the beginning. As the reformers move on Patient’s Rights, they may want to keep in mind that if employers decide en mass to get out of health benefits (if Patient’s Rights includes the ability to sue the employer), there are fewer markets for individual insurance if you are healthy (and no markets for the sick).

Reliance Insurance has temporarily also pulled out of the individual business and will reopen with reinsurance provided by Combined Insurance which is being spun off from AON. Confused?

Lincoln Re has sold their life and health reinsurance business to Swiss Re (one less market).

Protective Life is selling it’s Dental Benefits Division to Fortis for $300 million.

Interstudy Publications reports that HMO enrollment has slipped by 400,000 members from 1999 to 2000.

In the case of domestic partner (nonspousal, nondependent domestic partners) coverage, the IRS and DOL have ruled in at least one case that a union Health and Welfare fund must pay the employer portion of the FICA taxes plus FUTA taxes on the taxable domestic partner amount of insurance. The fund was also paying the employee portion of the FICA on the gross up in wages to pay for domestic partner coverage. The fund’s decision to pay the gross up on the employee portion of the FICA was not a violation of ERISA fiduciary responsibilities provided the payments are clearly specified as plan benefits in the plan document.

More mandates are likely as Senators Wellstone (D-MN- where else) and Domenici (R-NM) are sponsoring and getting passage of legislation for full mental health parity with medical and surgical benefits. The cost would be 1% additional according to PricewaterhouseCoopers. The American Psychological Association sponsored the price study and says the benefits are affordable. The law as adopted in the latest Senate vote would apply to those groups of 25 or more employees and would require parity in-network. Substance abuse is not included at present.

A Watson Wyatt study says that employees are willing to pay to have more choice in health benefits. 54% of employees prefer paying higher copayments and 25% say they would pay higher premiums. Employees (39%) like the idea of defined contribution, but don’t want their employers to get out of the business of administering health benefits (92%). Employers believe adding more choices would reduce negotiating clout (75%), increase administrative burdens (83%), increase employee confusion (79%) and improve employee satisfaction (50%).

Two suitors have reportedly emerged for Cobalt Corp (Blue Cross/Blue Shield/United of Wisconsin). They are Health Care Services Corp (BC/BS of IL) and Wellpoint (Blue Cross of GA and CA).

As premiums and premium equivalents move higher for COBRA coverage, more employers are also making available applications for temporary insurance for those who cannot afford COBRA, but who have no pre-existing conditions that are unaffordable. S&S Benefits is handling this for some employers via fax. Temporary medical insurance is usually far more affordable and is good for those employees who will become employed elsewhere within 6 months to a year.