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

Why be like everyone else?

The new Crain’s Chicago largest HMO and PPO list is out. It is interesting to note that only three out of 11 HMOs grew. BC/BS IL’s-HMO Illinois grew by 6.1% as BC pursues it’s tactic of actively pushing members into HMO’s by giving (what we’ve observed as) larger than deserved PPO rate increases. The other growing HMO’s specialize in government sponsored welfare care. Wait until the claims catch up. All other reported HMOs declined in enrollment, led by UHC at -25.1%, Aetna at –18.7%, Cigna at –18.4%.

The Crain’s Chicago PPO list listed 16 PPOs. Many didn’t provide enough information to be ranked. Preferred Plan, Inc. which was #2 on last year’s list apparently declined to submit a survey (most likely because they seem to be losing substantial membership as more local TPAs sign up with PHCS and move members to them to fulfill their contractual obligations).

As we hear more about defined contribution health plans, reporters seem to be catching on (surprising) and writing less positive articles. In terms of controlling the overall cost of health insurance EBRI reports that the plans are no panacea in their ability to control overall costs since less than 1/3 of health care expenditures are financed by employment based insurance (27%). In addition the most important sources of cost growth (more than 50%) are cited as coming from technological advances, new surgical techniques, drug therapies and diagnostic and treatment devices.

The Kaisernet reports that the WSJ had an article July 9 examining custom health plans (where employees get to design their programs) that we admit we missed. Fortunately, we didn’t miss the report that covered defined contribution plans. One company, Highmark, reports no change in cost trends since implementation two years ago. We agree with the conclusion that the newer plans are nothing more than cost shifting and adverse selection while claiming to be able to control costs. While we know higher utilizers would be penalized (which may be a goal for some employers), there is another twist. The director of health services for Delta Airlines astutely points out that the lowest utilizers will become a greater expense for companies offering the programs. Articles about DC success trumpet Fortune 500 clients. However, enrollment has been relatively minimal as the programs are usually only offered as alternatives. EBN points out that the Lumenos plan offered to Pharmacia received only 5% enrollment. Although there always seems to be discrepancies in terminology, an EBN article quotes Definity as saying their plan members generated 21 claims per 1000 members over $25,000. This is far higher than a stop loss frequency report we have which shows 2001 expected claims of 12.2 per 1250 members at $25,000. Did they really mean employees? We hope so….. we think.

We love the CEO of Fortis for now. When told that Senator Teddy has proposed a bill that seeks to lower insurance health costs through technology from what Teddy cites as 20% to 30% of total spending, Ben Cutler said, "He doesn’t have a clue." More true words were never spoken. Since the Feds spend 40% of the health expenditures in the country, they may want to look at their own efficiency. Oxymoron- government efficiency.

Another driver of costs is physician malpractice insurance (which is getting to be hard to find). The AMA says that 30 states are showing signs of crisis after median medical malpractice awards rose 43% between 1999 and 2000 to $1 million.

Increasing use of FMLA is pushing up costs and compliance risks for employers. EBN reports new research that employers that don’t track FMLA absences concurrently with paid disability and worker’s compensation can experience up to 50% more FMLA days compared to those who do track.