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

Have a Safe and Prosperous HAPPY NEW YEAR!

As we reported in an earlier special edition, the COBRA subsidy has been extended. The bill extends the nine-month, 65 percent premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through February 28, 2010. Under current law, employees who lose their jobs after December 31 are ineligible for the subsidy. The legislation also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

The Senate and House have both passed their versions of “health care reform.” Both are disasters and no doubt the compromise between the two will be as well. A PWC study of the implications show that individual premiums for insurance will rise by 47%, small group will increase by 23% with large group going up by 8% and self-funded increases of 6%. These increases are cumulative by 2016 and are without the normal rate of increase in medical care costs (of which nothing in either bill will slow down). So much for “reform.”

While reformers are counting on an excise tax on “rich plans” to pay for the “reforms,” 63% of 465 employers surveyed by Mercer say they will cut benefits rather than pay the excise tax. So the next question is, where will the money then come from? Another 23% say they will pass any tax on to their employees in the form of higher premium contributions. So much for not taxing the middle class. Watch for the unions (especially government plans) to get a further exemption from the rich plan tax….which will mean the rest of us will have to pay more.

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A new study by Thomson Reuters Healthcare Analytics says that 1/3 of the U.S. Health care costs ($700 Billion a year) is a result of fraud, paperwork, unnecessary care and other forms of waste. Unnecessary care, overuse of antibiotics and lab tests to protect against malpractice exposure accounts for 40% of the waste. Fraud accounts for another 19%, provider errors account for 12%, redundant paperwork and administrative inefficiency cost 17% and preventable conditions cost as much as 6% of the total waste. Of course, there is nothing in any of the bills passed that will reduce those numbers.

Oliver Wyman, an actuarial and consulting company says that people who will enter the individual health insurance market as a result of the reform bills being proposed will have 20% higher costs than those currently covered. They estimate that individual policies will increase in cost by 54% by year 5 of the reform.

In spite of disease management programs being put in jeopardy by GINA, 71% of employers surveyed by Mercer had such programs. Case Management is used by 82% of employers with health coverage and 78% of large employers provide nurse advice lines as part of their health care plans..

Of employers that offer CDHPs, 9% of large employers and 55% of small employers make the CDHP their only medical plan. Eighteen percent of small employers expect to offer a CDHP in 2010, as opposed to 15% in 2009.

EBRI surveyed employees on traditional plans vs. CDHP plans and found that CDHP participants were more cost conscious. For instance, 56% of CDHP users asked for generic drugs instead of brand name vs. 46% in traditional plans and 40% talked to their doctors about treatment costs and options vs. 33% in traditional programs. More CDHP participants also utilized wellness programs. Of course, none of these statistics are surprising given that traditionally more healthy people would choose a CDHP and given the larger deductibles, most people would be more cost conscious.

Given the economy, it is no surprise that a Hewitt survey says a record low number of companies are offering traditional holiday bonuses. Only 25% of 300 companies surveyed were offering such bonuses, as opposed to 42% in 2008. Nearly half of bonuses offered will be in the form of cash, with median spending at $250 per employee.  

A survey of 4,500 benefit managers by EBH and JHA found that most organizations are intending to keep their core benefit plans using 2009 funding arrangements. 50% anticipate no changes, 2% are changing eligibility, and 27% are adjusting the number of plans offered.

The Segal 2010 trend survey pegs PPO trend at 10.6% without Rx. Dental PPO is at 5.5% with indemnity dental at 6.2%. Rx trend is 9.1% and HMO trend is 10.2% with HDHPs at 11.9%.