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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 click: mailto:jseiler@ssbenefits.net                                                    http://www.ssbenefits.net/               July 2005 Issue


A Watson Wyatt survey says that employers are reluctant to outsource several core human resources responsibilities. Sixty-six percent of 135 firms surveyed keep their HR tasks in house. Less than 1/3 outsource some functions and only about 7% say they mostly outsource. From the press on outsourcing a few years back, it seemed unlikely that such results would be possible. Will something similar happen to the latest hot press subject?

Compcare Blue, the HMO subsidiary of BC/BS of Wisconsin and thus Anthem/Wellpoint, has announced an agreement to purchase Atrium Health Plan out of Hudson , WI . The Atrium HMO served about 52,000 people in Wisconsin and Minnesota .

Crain’s reports that mid-tier brokers Mesirow, Hub (Mack and Parker) and Acordia are now targets of the contingency fee crackdown. The article reports that the three mid-tier brokers refuse to follow the giants in not accepting contingent arrangements. The article reported that it’s unclear as to whether there will be any litigation in the matter. A.J. Gallagher agreed to a $27M settlement with the state of Illinois on the same matter and then promptly launched a number of people from their benefits department.

The uninsured pay for about 1/3rd of their care from doctors and hospitals according to the Families USA consumer group. The remaining costs are estimated at $43 Billion in 2005. Family costs for private insurance are estimated to include an extra $922 per year to cover those costs for the uninsured. For individual coverage, the estimated cost included to subsidize care for the uninsured is $341 per year.

In a related matter, immigrants accounted for just over 26% of the uninsured population in the U.S. in 2003, up from 19% in 1994. EBRI noted that immigrants accounted for 1/3 of the increase in the uninsured population from 1994 to 1998, but 86% of the increase from 1998 to 2003. There were 11.6 million uninsured immigrants in 2003, compared to 6.9 million in 1994, a 68% increase.

The BLS reports that health care costs rose 7.5% in 2004, compared to 11.4% in 2002. It depends on who is reporting as to what statistics say. The Centers for Studying Health System Change reported that health cost rose 8.2% in 2004, the same amount as they reported in 2003. Aon reports that specialty pharmacy costs will rise 22.5% this year compared with a 13.1% increase in overall pharmacy costs. Specialty costs represent about 5% of pharmacy spending. Specialty drugs include drugs for such diseases as anemia, cancer, multiple sclerosis and rheumatoid arthritis.

Hartford surveyed 421 benefit agencies and found that they are also being squeezed by the same benefit costs that affect the employers they represent. Compensation and benefits costs account for 55%-60% of firm expenses and 75% of the firms require employees to contribute to their health care premium.

Long Term Care insurance continues to struggle as a viable product. Nationwide, about 362,000 individuals bought new policies in 2004, down about 38% from the year 2000. Companies have increased prices substantially as they try to figure out how to make LTC a viable product. Since 2000, half of the top companies that sold the product have stopped new business sales. Some of those that have stopped include CNA, Aegon (Transamerica), Fortis and TIAA-CREF. More strict underwriting is being used to improve profitability, which in part has been affected by lower than expected lapse ratios.

A survey by Aon showed that 43% of the 205 companies they surveyed already offered wellness plans. Participating benefit managers report that they often have trouble persuading employees to participate in the programs. Twenty-five percent of the employers reported that they ran into resistance from more than half their employees. The top reasons for non-participation were “Not sufficiently motivated” and “too busy.” You can lead a horse to water, but you can’t make it drink.

Aside from the article on our website, we have another good article detailing the network discount shell game. Email jseiler@ssbenefits.net for a copy.

We usually use any extra space in the newsletter to rant about something that bothers us in the benefits business. It’s summer though, and with the better weather our mood is better, so we’ll take at least this month off.