Hearsay & News Review
Health Systems has announced it has received all the clearances necessary to
complete the acquisition of Pacific Life. They say the sale complements their
recent acquisition of American Medical Security. Yes it does. One winner and one
to the Robert Wood Johnson Foundation, 73% of registered voters are concerned
about losing their health coverage. Their concern ranked second to concerns
about Social Security and Medicare solvency, but more important than jobs and
the economy. The report found that 45% of non-elderly uninsured adults reported
having one or more chronic health problems. The report did not elaborate on why
so few registered voters actually vote.
HealthCare bought Definity and now Wellpoint has announced the acquisition of
Lumenos (a CDH pioneer) and their 214,000 members for $185M that is expected to
close in the second quarter of 2005. Thatís only $864 per member. Lumenos
reports expected operating revenue of $45M in 2005 (or only $210 per member per
year). Given the price per member, one wonders if this is more of a ďshowĒ
acquisition than a real positive statement about CDH plans.
to news reports,
has capped malpractice awards for punitive damages in the last legislative
session. Caps were placed at $500K on physician claims and $1M on hospitals.
This is on the heels of ISMIE Mutual raising corporate physician malpractice
rates. The company has 56% market share in
and says that since the year 2000, lawsuits against doctors and partnerships
have risen to a level three times greater than expected.
employers must inform Medicare eligible workers by November 15
whether their prescription drug coverage is at least equivalent to the drug
benefits that will be available under Medicare Part D. The U.S. Centers for
Medicare and Medicaid Services is expected to issue a model notice that
employers could adopt and distribute to any Medicare eligible individuals.
Guidance is also expected from CMS so that employers would not have to retain
actuaries to make determinations as to plan values vs. Medicare. Notices are
necessary since employer provided coverage that is equivalent or better than
Part D qualifies as creditable coverage and allows Medicare eligible employees
to delay enrollment in Part D without penalty. It will be interesting to see how
this law affects sales of HSA plans that will not be allowed to have separate
drug coverage as of January 1st.
to MetLife, the number one worry of 71% of employees is having enough money to
pay bills during a period of loss of income. The study reports that 42% of
employees live paycheck to paycheck and only 24% of full-time employees feel in
control of their finances.
J. Gallagher agreed to pay $27M to end investigations by state insurance
regulators and the Illinois Attorney Generalís office. The settlement bars
Gallagher from collecting contingent commissions, which also should be an income
booster for Blue Cross of Illinois.
Treasury Department has announced that is will allow a 2.5 month extension for
claims to be paid from flexible spending accounts beyond the current plan year
end date. The additional grace period for submitting expenses would still apply.
Our opinion is that the employees who donít spend the money in 12 months will
probably be the same ones who complain when it is not spent in 14.5 months.
reports that in 2005, roughly 45% of total medical costs will be spent on
inpatient and outpatient hospital care, 37% will go to physician services and
15% will be for prescription drug costs. Three percent will be spent on
miscellaneous services. A family of four will spend approximately $12,214. In a
typical PPO plan that family will spend $2,035 in the form of deductibles,
coinsurance and co-payments, with insurance picking up the balance.
study by Wells Fargo of 414 employers, representing 339,000 eligible employees
with most employers in the one to 500 employee size range, showed that 96%
offered medical and Rx benefits. Employers picked up an average of 75% of the
cost. 74% of employers with more than 500 employees were self-funded. Sixty-four
percent of eligible employees were enrolled in PPO plans with an average cost of
$3,799 PEPY for single and $10,596 for family (average of $5,314 PEPY for all
coverage). Surveys are always somewhat suspect and some items in this survey
were as well. It was reported that only 42% used case management (perhaps those
that are fully insured didnít know that the carriers are doing this) to
control costs. Another confusing item was that 48% reported using
pre-certification and 48% reported using utilization management to help control
costs. We didnít know that the two were so separate and distinct, but maybe
that also confused the employers who were surveyed.