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

Why be like everyone else?

Weiss Ratings reports that 35 insurance companies failed in the year 2000. That’s an increase from 27 failures in 1999. Additionally, eighteen HMOs folded in 2000. That’s a decrease from 22 in 1999. Property and casualty insurers accounted for 28 of the 35 insurance company failures in 2000.

Web based insurance services don’t seem to be faring any better. Many mergers and failures and one of the biggest, Quotesmith, has reportedly filed for a 6 to I Reverse stock split.

According to the Labor Department, things aren’t getting much better. (Like we didn’t know that!)The latest CPI shows medical costs rose 4.2% last year, the largest climb since 1994’s 4.9%. The overall CPI rise was 3.4% in 2000, the highest annual increase since a 6.1% increase in 1990.

URAC is now undertaking the task of trying to measure PPO "quality." More wasted money. Of course there is no way to identify benchmarks for quality of care due to a PPO, so one wonders how benchmarks will be designed. Plan designs vary dramatically within the world of PPO plans, so it seems the only thing that could come out of this study is a measurement of effective discounts and access…a commodity already available. Now that almost all medical providers participate in a variety of PPOs and HMOs, one wonders about the validity of any savings studies. What do you measure against when most providers cannot positively identify the true cost of the service (verses what they would like to charge)?

An interesting article in a recent Employee Benefit News that states that disability management usually doesn’t pay for itself. To paraphrase: the typical bells and whistles disability management program can cost $36,000 per year per 1000 employees. The incidence of disability is usually less than 50 per 1000 employees. The article says that you can then figure that 40 of the 50 will go back to work as soon as possible. That leaves 10 workers, or $3600 apiece to pay for the program. If you assume an average disability expense of $100 per day, each of those 10 remaining disabilities would have to be have their disabilities reduced by an unrealistic 36 days each to reach break even. The same article states that those disability management dollars would be far better spent on disease management programs. Something to think about!

Medicare HMO reimbursements are increasing as HMO withdrawals affected almost 900,000 enrollees last year. The minimum reimbursements increase to $525/ enrollee/month in metro areas and $475 in rural areas from $415.01 for both. The increase takes effect March 1^st. You may want to use these costs to compare to current Medicare supplemental retiree coverage being provided to your retirees, since Medicare HMOs are supposed to provide better coverage at more affordable rates.

Benefit issues continue to be major in attracting and retaining quality employees. D&T’s 2000 benchmarking survey says that 34% of 452 employers surveyed made 401(k) eligibility immediate for new hires. 78% provide some form of matching. The average number of investment options is 10. Plan sponsors pay the majority of 401(k) fees. 84% report having Internet access for plan participants and 88% allow transactions via the Internet. Last year, the average investment returned on 401(k) balances declined by 4% according to ABCNews.com.

Aetna, Inc. says that it will now allow physicians nationwide to opt out of All products contracts for those physicians not based in hospitals. Watch for docs to drop the HMO and move to PPO arrangements as their contracts come up.

There was fear a case that went to the US Supreme Court could have eliminated the substantial savings that can be provided by subrogation clauses in ERISA plans. The case involved a car accident where the plan attempted reimbursement of claims that were essentially double paid due to settlement under auto insurance. The case was settled out of court before the Supreme Court heard arguments.

Unique benefit perks were the subjects of an Oxford Health Plans survey. 29% of companies offered healthy lunches or dinners, but when offered, 84% of employees took advantage of them. Only 18% offered memberships to on-site or off-site health clubs, but when offered, 72% of employees join. Only 6% of employers surveyed offered massage, but 60% of employees offered the benefit took advantage of it. These types of benefits generally appeal to both men and women, but when it comes to massage, 83% of women signed up verses 41% of men.

Harris polls say 69% of respondents rate their health plans an "A" or "B" while 8% say "D" or "F." 51% want a continuation of employer sponsored plans vs.19% for government plans or 24% who want to purchase on their own. The survey finds that most dissatisfaction with managed care is either media or physician driven verses experience driven.