Benefits.....Opinion, Hearsay & News Review
A study by McKinsey in early
2011 of 1,300 employers found that 30% of respondents will “definitely” or
“probably” stop offering employer –sponsored health insurance after 2014.
The more awareness of the rules of Obamacare, the more likely were employers to
consider dropping the coverage. The
McKinsey study immediately set off a firestorm in Congress and the White House.
Sen. Baucus of MT demanded the study methodology be published and transparent
(something Baucus and the Obama administration apparently forgot about when
passing the law, but demand of a survey!?). When McKinsey did publish the
methodology and stood by the conclusions, members of Congress called the study
unfair and biased. In the meantime,
the Benfield group did a study of more than 100 jumbo employers (5,000 plus
employees in the U.S.A). In their study, just 7% of jumbo employers said they
were considering dropping their medical coverage after 2014. However, 21% said
they were highly likely and 49% were somewhat likely to drop coverage if their
industry competitors stopped offering health benefits. Surprisingly (sic),
Baucus and the White House did not demand transparency.
While rivals such as WellPoint
and Aetna have sold or outsourced their Rx benefits, Reuters reports that UHC is
seen as likely to take over the $11B it currently has outsourced to Medco.
United’s OptumRx has been more active in pursuing employer business to
supplement its position in the Medicare market and to raise profits in an area
not affected as greatly by Obamacare.
Meanwhile, Aetna is
diversifying by acquiring the Medicare Supplement business of Genworth in 39
states with 145,000 members.
The IRS has given non-profit
BCBS health plans and other non-profits another year to comply with the
requirement of spending at least 80% (small plans and individual plans) or 85%
(large plans of 100+ employees) of premiums on health care and quality
improvement efforts. Nothing unfair or biased about that.
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The average long term care
claim is expected to be $159,000 according to a study by Aon and the American
Health Care Assn. With an average cost per bed day of $1,430, the average long
term care claim would calculate to 111 bed days.
The Obamacare waiver program
was going so well, it may well have been a distraction to the re-election
efforts of the President. Therefore, the administration has announced that no
more waivers will be accepted after September 22, 2011. The waivers address a
provision of the law that phases out annual dollar limits on coverage by health
insurance plans. The waivers were supposed to be for one year, but taxpayer
subsidized coverage is not expected until 2014 (if exchanges are running by
then), The question apparently not asked, is how will plans that needed the
waiver survive until 2014, or will these plans just eliminate coverage? Maybe we
should ask the Messiah?
The parent company of BCBS-IL,
TX, NM and OK (Health Care Service
Corp.) saw its net income jump to
$1.1 Billion in 2010, doubling results from 2009 according to a report in
Crain’s. As they raised rates to compensate for Obamacare, the company’s
financial statement is reported as stating that if the Obamacare 85% loss ratio
requirement was in effect, the company would have to return $146 million to
individual policy members.
Walgreens is having a contract
fight with Express Scripts and is posturing that it is willing to walk away from
more than $5 Billion in revenue the company receives from Express Scripts. Last
year a similar dispute was resolved with CVS Caremark. Walgreens has said they
will stop participating with Express Scripts (the second largest PBM in the
U.S.) on January 1st. We would not be surprised if this dispute gets
Symetra is acquiring the
renewal rights to American United Life’s medical stop loss business for $26
million. The acquisition will put Symetra in the top three in size of their stop
loss block of business.
Medicare’s chief actuary has
a situation that he says keeps him awake at night worrying. Richard Foster says
under Obamacare, nearly 3 million new
people will be eligible for Medicaid in 2014, even for couples with incomes of
up to $64,000 a year. The federal government would be responsible for up to 60%
of the costs of the Medicaid federal-state partnership. The three million are
early retirees who would qualify on top of the estimated 16 to 20 million
additional people that Obamacare is expected to add to the Medicaid program.
Medicaid currently serves about 50 million low income Americans. Do you think
the state actuaries are going to be sleeping well?
More attention is now being
drawn to the Independent Payment Advisory Board created by Obamacare. The 15
members of IPAB (appointed by the President) will decide what services are
reimbursed and what expenses are cut in the Medicare system. Congress is barred
from reversing or modifying the recommendations and it can only abolish the IPAB
by passing a resolution introduced between Jan 3 and Feb. 1, 2017 if both houses
pass the resolution by Aug. 15th of the same year by a 3/5ths
majority. If we can’t call the IPAB a “death panel,” can we at least agree
that we don’t want 15 unelected people controlling health care costs as we
reach retirement age?