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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 www.ssbenefits.net January 2004 Issue

We wish you a HAPPY and Prosperous 2004! Happy New Year and God Bless America!

The Segal Trend survey is out. 2004 projected trends are as follows: PPOw/Rx-14.4%, Indemnity w/Rx-15.6%, POSw/Rx-13.9%, HMOw/Rx-13.7%, High Deductible w/Rx-14.7%, Rx retail-18.1%, Rx Mail order 17.4%, Dental Indemnity-7.4%, Dental PPO-6.8%, DMO-5.2%. All are down slightly from last year. Rx included in regular trend appears to be about 1% of trend.

The DOL says that benefit costs for civilian workers in private industry accounted for an average of 27.9% of payroll, or $6.38 of the average of $22.84 per hour employers spent on employee compensation in the third quarter. Legally required Social Security, Medicare, unemployment and worker’s comp made 8.5% of the total ($1.95). All group insurance was 6.9% ($1.59). Costs for paid leave averaged 6.4% ($1.48) of compensation costs.

MetLife says that 32% of employees are currently satisfied with their benefits, a 9% drop from a year ago. However, 41% of employers believe employees are satisfied with their benefits. There seems to be some disconnect here.

Tort costs continue to rise with Tillinghast saying 2002 costs were $233 Billion- up13.3% from the previous year. Only 22 cents of every dollar goes to compensate plaintiffs’ actual economic losses. Where do you suppose the rest goes?

*AdvancePCS is losing Health Care Service Corp. as a client to Prime Therapeutics of Minnesota. HCSC is the Blues plans for Illinois, New Mexico and Texas and composes 5% of AdvancePCS revenue. The change is somewhat self- serving since Prime is owned by a number of Blue Cross plans. Express Scripts is paying $335M for Curascript, Inc. of Orlando, Florida. *First Health, while slowing down growth projections, has acquired PPO Oklahoma for $10M to realize $5M in annual revenue. *The Principal Financial Group has announced an agreement to purchase the Molloy Companies, a TPA in Indianapolis. Molloy covers 130,000 employee lives as a TPA. *HMO enrollment fell to 71.8M, a decrease of 5.6% from 2002. *Dreyer Clinic is joining the Aetna PPO and HealthFund plans as of 1/1/04.

As of the date of this newsletter, we still have no word on whether Congress will allow continued new business of Archer MSA plans in 2004. Those MSAs on the books can continue, but with the new HSA legislation, Congress may not feel a need to continue the availability of new MSA plans.

UHC reports no progress negotiating with Advocate Health Care hospitals, but has signed up 75% of their docs who have admitting privileges at non-Advocate facilities.

Mercer reports that group health care costs rose by an average of 10.1% to $6,215 PEPY. Groups of 500+lives averaged $6,348 while 10-499 averaged $6,027. Costs included were medical, dental, Rx, mental health and vision care. Medical costs by plan type were: POS-$5,982, Indemnity-$5,802, PPO-$5,730, HMO-$5,436 for 500+ life groups. Midwest all costs was an average of $6,602, Northeast-$6,717, South-$5,783, West-$6,616.

Wisconsin Governor Jim Doyle signed a bill creating 5 health purchasing cooperatives for farmers, self-employed workers and very small business’ based on the "successful" program in Minnesota that they say will lower costs by an average of 10%. Each cooperative must have at least 5,000 members and they say will lower costs through lower deductibles. Unfortunately, they may not have read that the Minnesota program is not very successful according to articles and experts in that state. They say the first policies will go into effect next summer. No announcement was made on who would provide insurance for these cooperatives. Good luck!

So far only 20% of area docs (approximately 1,000) have decided to participate in a new health plan in which doctors agree to accept reduced fees as payment in full for the Business Health Care Group of SE Wisconsin. The group represents 43 businesses and 110,000 members. Wisconsin health costs average $7,618 per employee in 2003 compared to the national average of $6,348. Doc fees under the program are set at 150% of Medicare allowable charges. Approximately 4,000 doctors have so far refused to sign up.