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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                                              http://www.ssbenefits.net/ July 2006 Issue

A study published in Health Affairs showed that employers with one to nine workers pay an average of 18% more in health premiums than those in firms of over 1000 employees. When the authors adjusted premiums for the quality of benefits, ME, WV, WY and WI were the states where employers and employees got the least value for their money.

According to a Mercer survey of 3000 employers, health benefits costs are expected to increase by 6.7% to $7,564 PEPY. Care management is the number one tool employers are using to attempt to slow health cost increases.

According to Medco, the increase in spending on Rx fell from 8.5% in 2004 to 5.4% in 2005. However, spending for specialty drugs rose by 16.9% last year, following a 20.4% increase in 2004. The top drivers in Rx spending were lipid lowering drugs, asthma treatments, rheumatoid arthritis medications and anti-hypertensives. Sleep aid usage grew by 31.5% last year, faster than any other drug class. According to the American Institute for Preventive Medicine, U.S. consumers will spend $250 billion on Rx this year. If there was complete generic substitution where available, it would save 11%, or $8.8 billion. Increasing the brand name copay by just $10 can increase the generic fill rate by 3% to 4%. Express Scripts reports that generics accounted for 56.3% of all prescriptions, up from 42.1% in 2001. Generics are considered to be more safe and a Medco survey indicated that 70% of physicians are “more concerned” about safety and 27% are “significantly more concerned” about safety after recent problems with COX-2 inhibitors and antidepressants. On June 23, Merck lost patent protection on Zocor and the cost of the generic is supposed to reduce by up to 90% in one year. Zocor had cost $3 per pill.

The IRS is proposing new rules for dependent care spending accounts and clarifying that tax credits are only available for the year in which expenses were paid and in the year services were rendered.

A survey of CFOs indicates that the rising cost of health insurance is the number one concern, followed by cash flow management and debt/equity financing. Staff recruitment and retention was third on the list. The top strategies to deal with health costs were reducing costs in other company areas, followed by increasing employee contributions or copayments.

A new MetLife survey says that the majority of workers are dissatisfied with their benefits. About 39% were satisfied with their benefits (29% at firms with less than 50 employees). Only 30% of employees felt their benefits were well communicated.

Wisconsin has failed to pass tax breaks allowed under federal laws for HSA plans. Meanwhile, a study of the federal employees plans reveals that those employees enrolled in HSA plans tended to be younger, higher paid and enrolled as individuals, according to a GAO report. According to the National Business Group on Health, median employee enrollment in high deductible plans is just 7%. However in a recent EBN Quickpoll, 19% indicated that HRA enrollment increased at their company while 25% reported static enrollment. According to the American Benefits Council, 60% of workers with HSA plans have opened an HSA bank account which contains an average balance of $1,181. They also estimate that only 20% of eligible employees participate in FSA accounts, for fear of losing dollars at year end.

A BenefitNews.com survey on the web showed that 33% of employers pay 90% or more of the medical premiums. 27% pay 80% to 89%, 23% pay 70% to 79%, 8% pay 60% to 69% and 9% pay less than 60% of the premium charged.

Hewitt reports that HMO rate hikes average 11.5% in the Midwest , 13.7% in the West, 13.5% in the Southwest, 11% in the Southeast and 9.9% in the Northeast.

A Florida judge dismissed claims that UnitedHealth Group cheated doctors out of payments for medical services. The suit was filed by 700,000 docs in the late 90’s and Aetna , Cigna and Wellpoint all settled out of court.

More companies are self-insuring their health coverage. 71% of PPO plans and 68% of POS plans are self-funded. Even 37% of HMOs are now self-funded.

A new release from the BLS shows the average labor cost was $26.86 per hour, with wages comprising $18.82 (70%).  Benefits cost $8.04, including mandated benefits such as worker’s comp, Medicare, unemployment and Social Security and all other benefits. Of the $8.04, the cost for health benefits was $2.05 (7.6% of the labor cost).

Have a safe Independence Day!

                 GOD BLESS AMERICA !