S&S 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 1^st. We would not be surprised if this dispute gets resolved.

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. 15^th 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?