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

Why be like everyone else?

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

Email: jseiler@ssbenefits.net IF YOU WOULD RATHER RECEIVE THIS VIA E-MAIL !!!!

Volume 3 Issue 7-Street Talk July, 2001 Issue

Time to clear the files and catch up. We’ll run little long this issue to get you up to date. Plus, "co-conspirators" McCain, Kennedy and our court systems are a little too juicy to pass on the slam. We are continually amazed at the dichotomy of the logic that wants the best of everything to cost nothing. Apparently our lawmakers and courts haven’t figured out that the costs are becoming unaffordable. Therefore, they just keep adding to the cost.

The U.S. Senate has passed a "Patient’s Rights" bill that will go to the House for debate. One can hardly read about this legislation without wondering if the bill would not better be named the "Senate’s Gift for Trial Lawyer’s Bill." The bill will do little to protect patients or give them any more "rights", but it will cause lawsuits to skyrocket, increase legal expenses and may cause employers to drop coverage if they feel they can be party to a suit. By deftly naming this bill as being "patient’s rights," those in favor of the bill can be sure that anyone opposing the bill is labeled as being against patients seeking medical care….which is pure hogwash.

May the circle be unbroken. For those that think the "patient’s rights bill" won’t cost, take a look at the Independence Blues in PA. They are increasing their fees to docs because malpractice premiums are rising. Malpractice premiums are rising due to increases in malpractice suits, awards and settlements. BI reports that malpractice premiums are rising from 30% to 100%. The combined loss ratio in the industry was 125.8% in 1999. The fee increases will be reflected in employer health insurance renewals. Can anyone say "Tort Reform?"

Aetna is little by little shedding itself of unprofitable HMO operations, quite possibly setting itself up for a profitable sale of it’s PPO in the future. Aetna has pulled out of the CHIP program in Colorado that was designed to leverage small business buying power. They have withdrawn their HMO offerings in 11 counties of the Central Valley in California as well as from 12 zip codes in Riverside and San Bernardino counties. Aetna has also negotiated with Coventry to take over its commercial HMO in Louisiana along with the same in St.Louis. Aetna has also admitted to Wall Street that it has overpaid millions to those with expired medical benefits and to providers. Slow record keeping and systems problems had Aetna paying claims on expired policies and double paying providers who had submitted bills multiple times due to frustration with Aetna’s slow paying systems.

Merck-Medco handles Rx coverage for about 1 in 4 Americans. They have released a study that says spending on Rx will double in the next five years. While those from 65-79 years old have the highest cost per member for Rx ($1,400 annually), the rate of Rx spending growth is highest in the age 40-55 (Baby Boomer) category for chronic problems like heart disease and gastrointestinal disorders.

Employers may decide to curtail their offering of LTD benefits to Minnesota employees. In June, the Minnesota Court of Appeals ruled that an LTD policy was subject to mental health parity rules and that the two-year restriction on mental disability payments (unless hospitalized) was discriminatory. The court ruled that LTD benefits with the two-year restriction are a violation of the state’s Human Rights Act.

BC/BS of IL is changing their Rx vendor to AdvancePCS from Wellpoint for retail scripts effective Jan. 1,2002. The reasoning is to change to a common vendor with acquisition partners BC/BS in Texas and New Mexico. Mail order is being consolidated with Walgreens.

A.M. Best has downgraded Cobalt Corp. to B++ from A-. Subsidiaries are BC/BS United of Wisconsin, Compcare, Unity Health Plans, American Medical Securities, Valley Health Plan, United Heartland Life and United Wisconsin. Given the involvement with AMS, this somehow comes as no surprise to those who have followed AMS over the years.

CalPERS is said to be exploring direct contracting to replace their HMO plans. If the plan does continue, we can enjoy watching a mess similar to the energy crisis in the Land of Fruit and Nuts.

The HCFA is changing names to CMS (Centers for Medicare and Medicaid Services) to reflect their "new culture of responsiveness." We’ll see.

Defined contribution healthcare with each individual basically designing the coverage to fit their needs. Yeah, that’ll work. A new study by D.S. Howard of 101 corporation benefit managers found that 38 companies of 5000 or more employees offered an average of 40 different health options, but that 48% of managers said some or most employees find health plans too complex and hard to understand. Anyone who has ever conducted an open enrollment meeting might even find that figure a little hard to believe.

A ruling in a lawsuit against Bartell Drug Company contended that not covering contraceptives for women violated the Pregnancy Discrimination Act. This follows an EEOC ruling in December that two employers violated the Act by failing to cover contraceptives, while covering other preventive treatments. Word on the street has it that the makers of those little machines in truckstop bathrooms are retooling to provide receipts for FSA accounts.

SHRM has released a study which shows that employers that offer benefits designed to help increase the balance between their work and personal lives has increased significantly in the last three years. The number of employers offering dependent care flexible spending is up from 58% to 69%. EAP offerings have increased from 58% to 67% and medical care flex spending is offered by 69% of employers, up from 55%. Significant changes were also made in child and elder care offerings and paid time off. Retiree health offerings have decreased substantially.

The US Chamber of Commerce says that employee benefits costs were 36.8% of wages in 1999 ($14,060 per employee). 19% of the cost was federal payroll taxes and 20% of the cost was attributed to health care premiums and 1/3 to paid time off.

Assets in vested in 401(k) plans lost $72 billion in 2000(!), but while slowing, employee contributions remain strong according to Cerulli and Associates in Boston.

If you enjoy this newsletter we hope you keep us in mind for your group benefits needs. Choosing to use S&S Benefits Consulting will not disrupt current arrangements in place for your employees, but our services will most likely save you money and help reduce legal exposure on your health and welfare plans.