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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/ August 2006 Issue

A survey by SHRM of benefit managers of the changes in health plans in 2005 showed that the top four changes were increased coinsurance and co-pays (66%), increased participant cost (59%), increased deductibles (56%) and increased Rx copays (55%). Significant other changes include increased reimbursement for fitness center use (37% reimburse this cost) and weight loss programs were up from 25% to 29% of those surveyed offering reimbursement.

The International Society of Employee Benefits surveyed 430 employers and 28% offered a CDHP, up from 22% last year. 53% were contributing to the HSA accounts. HRA use appears to be switching to HSA use.

BenefitNews.comís quick survey gave an interesting result. 32% of those surveyed indicated that employee resistance and entitlement mentalities were the biggest barrier to cost containment. 29% cited insurer and provider pricing while 17% said there was an increasing prevalence of certain illnesses and 22% believed it was the high cost catastrophic claims that were the largest barrier.

Out of a population of 297,000,000 in the USA , the Privacy Rights Clearinghouse believes that a minimum of 100,000,000 people have had their identity compromised in the last 483 days.

Spending for Rx drugs was $188.5 billion in 2004, over 4.5 times more than the $40.3 billion spent in 1990. The rate of increase has declined from 20% in 1999 to 8% in 2004. The share of Rx paid by health plans has increased dramatically from 26% in 1990 to 48% in 2004, while the share paid by people has declined from 56% in 1990 to 25% in 2004. During that time utilization increased 71%. We said back in the 1980ís that HMOís adding Rx paid as copays would increase utilization and it did. When PPOs added copays to compete with HMO benefits, it just made the problem worse.

Dental is offered by 71% of all employers surveyed by Forrester Research in 2005. The figures are at an 89% offering rate or higher for group sizes from 500 and up and go as low as a 40% offering rate for employers with 6 to 24 employees.

According to Milliman, the average annual medical cost for a family of 4 in 2006 is $13,382. That figure contains both the costs for the employerís benefit plan and the portion paid by the consumer in the form of cost sharing. Of the $13,382, a family averages $2,210 out of pocket in cost sharing plus $2,810 in payroll deductions. The balance of $8,362 (62%) is paid by the employer. Milliman is also predicting 9.7% increases for HMOís and 10.7% PPO increases for 2007.

According to MetLife, 47% of employees currently live paycheck to paycheck, up from 42% in 2004. Met uses these figures to show the importance of having employer provided disability coverage.

A poll of 74,000 employers showed that 47% did not file required Form 5500 as required by the feds in 2003. Penalties for non-compliance include DOL fines of up to $1,100 per day for each plan.

HRH has purchased Chicago based Thilman and Fillippini brokerage. Allianz has announced that their health stop loss business is for sale. The nationís Blues plans continued to be profitable with a 15% jump in net income in 2005 after a 24% earnings increase in 2004. Net profit margin was 3.3% in 2005 with 94.4 million members, a 2% increase).

A U.S. District judge citing ERISA has struck down Marylandís Fair Share Health Care Act which would have required large employers (over 10,000 employees) to spend a certain amount (8% of payroll) on employee health care.

On September 1st, Humana will switch from Walgreenís Mail Service to their own facility which will be known as RightSource, meaning Human gets to keep more of the profit. Surprising, isnít it?

Be aware that more hospital sponsored outpatient treatment centers are being billed as ER facilities. Employees may think they are not using the ER (and avoiding the special ER copay) only to find out that the hospital bills the separate facility as an ER. A prime example is Northwest Community Hospital ís treatment centers in places like Schaumburg .

Blue Cross is upsetting doctors and hospitals in the Chicago area according to an article in Crains (7/31/06). The Blues are requiring providers to get a reference number from them before approving medical imaging (such as MRI tests, CT scans). Since the program took effect in April, 5% of requested referrals ended up dropping their request after talking with the firm the Blues hired to conduct the review. Somehow we donít think weíll be hearing those docs on the latest Blues radio commercials.

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