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

Why be like everyone else?

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

Email: jseiler@ssbenefits.net www.ssbenefits.net

Volume 5 Issue 4 Street Talk August, 2003 Issue

Cigna has announced its earnings will miss expectations by $175 M in 2003 with actual earnings expected to be $500 to $550 M. Cigna blames steeper than expected medical inflation and lost membership. The number one health insurer, United Health Group said second quarter earnings were up 35%. Membership increased from16.2 million to 17 million in commercial plans. First Health reported that second quarter earnings rose 14% on a 24% increase in revenue. Humana reported a revenue increase of 14% in the second quarter. Commercial membership grew by 2.5% while government business dropped slightly. Aetna, the #3 health insurer reported 2nd quarter profit at a higher than expected $138.4 M. Great West also reported a higher second quarter profit along with Anthem. Anthem said profit jumped 67% to $177.3 M.

It was announced that Near North Insurance Brokerage has been sold to Hub International. Near North’s board approved the deal while Mickey Segal awaits trial. It was announced earlier that start up Frontenac Group had dropped out of the bidding.

The New York hospital surcharge (which is paid by all employers with employees in New York or who use New York hospitals) has been extended and increased from 8.18% to 8.85% of patient charges.

The EBN-Hay survey says that 96% of survey participants rated health plan costs as their top concern. Recruiting and retention was second at 74%. Nine percent are using defined contribution and HRA plans to contain cost while 18% consolidated plan choices.

Private Healthcare Systems (PHCS) received NCQA re-certification for its PPO and UR services.

Minnesota’s Supreme Court has ruled that stop loss premiums are not subject to the state’s premium tax.

Employee benefit costs for high tech companies are up over 16% to $8,688 per year according to a survey of 38 high tech companies by Culpepper research. Health, dental, life and disability benefits totaled $6,528 per year, or 8% of payroll.

CareFirst of Maryland has been reinstated to BC/BS PPO.

Milliman USA has announces that HMOs will be increasing rates an average of 14% next year as part of their HMO survey of 72 participating HMOs.

Hewitt reports the average employee contribution for healthcare to be 19% of $6,295 per EE/YR in costs. That is up from 17% and $5,456 per year for the previous year’s survey. It is funny how the costs for the surveyed groups who are most likely their own, are far above national averages. Is this high priced consulting firm doing something wrong?

Northwestern Memorial hospital has dumped BC/BS’s HMO Illinois, effective January 1st, along with their 25,000 members. We’ll await the inevitable reinstatement.

An amusing article in BI about business jargon. Here’s one for CDHPs- Leveraged self-empowerment strategy-otherwise known as quadrupling your health plan deductible.

Suggestions to reduce costs form various sources, including us: Switch to coinsurance from copays. Go to a defined contribution approach to healthcare costs. Create incentives towards healthy behaviors. Communicate the tough road ahead. Spell out responsibilities and costs. If health costs are out of control, trim wage increases to help pay for health cost increases since health benefits are 100% deductible, but wage increases cost more in payroll taxes. Increase deductibles and coinsurance to track inflation.

Maine has approved a plan to "ensure" coverage for many of the state’s 190,000 uninsured. Dirigo Health company (nice name) was created to contract with commercial insurers to provide coverage to small employers who join the program. They believe the pooling of the many small employers will create leverage to lower premiums. Premiums for low-income enrollees will be subsidized. The estimated cost of uncompensated care in Maine is $275M. Maine expects providers to lower costs since there will be less uncompensated care. The savings will be used for low-income subsidies. Lets just say the savings for subsidies is the whole $275M that providers will willingly provide in discounted costs. Dividing by a low $5,000 in annual cost per EE, would yield coverage for 55,000 of the state’s 190,000 uninsured. More government pie in the sky.

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