S&S Benefits.....Opinion, Hearsay & News Review

With the nation considering health care reform, it might be well to consider some facts put out by Wellpoint. Health plan payments for hospitals and doctors increased from over $36M in 2005 to about $43M in 2007(in all markets except NY, Co and NV), an 18% increase in three years. Wellpoint estimates that health care fraud accounts for more than $100B of expenses. Medical error and drug safety events contribute up to 2.4 million extra hospital days per year and $9Billion in costs. Approximately 30% of health care spending goes towards redundant or inappropriate care. Medical liability and defensive medicine could account for as much as 10% of premium costs. State mandates have done little to lower costs. In fact, 45 insurers fled the Kentucky individual market before “reforms” were reversed. Maine has only one insurance carrier actively writing business in the individual market and the Maine Dept. of Insurance has approved premium increases of 124% in the last 6 years. Milliman estimated that 500,000 individuals insured under individual or small group coverage dropped their coverage after NY instituted guaranteed issue with rating restrictions. Rates were so high that people dropped out of the system. So much for state mandates.

Figures and facts like those above go to show that health care “reform” may have many unintended consequences. If the government puts forth a public plan, chances are the private market would disappear. Then, the only way to control costs would be rationing. Refer to England or Canada to see what happens with rationing. As state “reform” efforts have consistently shown, costs DO NOT go down, just because everyone has access to coverage. In fact, they have gone up.

The IRS has released HSA plan design changes for January 1, 2010. For 2010, the annual limit on deductions for an individual with self-only coverage is $3,050. For family the limit will be $6,150. The minimum deductible will be $1,200 for self-only and $2,400 for family coverage and annual out of pocket expenses (including deductibles) cannot exceed $5,950 for self-only or $11,900 for family coverage. The annual catch-up contribution limit for those 55 and over will remain at $1,000.

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The EEOC Office of Legal Counsel has issued a letter (not an official opinion) that states that requiring a health risk assessment in order to participate in a self-funded plan is not allowed and would be a violation of ADA .

The Milliman Medical Index has been issued for 2009 which shows the total medical cost for a family of four to average $16,771 per year, a 7.4% increase from 2008. The figure includes out of pocket, and premium costs and Milliman states that the increase was primarily due to increased employee contributions for their plans. The index is based on 14 major American metropolitan areas. Of the $16,771, the employer pays $9,947 (59%), employee payroll deduction costs were $4,004 (24%) and out of pocket costs were $2,820 (17%). Assuming a loss ratio of 100%, the $16,771 for a family of 4 would be divided as follows for medical costs: $5,088 inpatient hospital (30%), $2,772 outpatient facility (17%), $5,760 physician (34%), $2,484 pharmacy (15%) and $667 other miscellaneous (4%).

In the midst of all the government bailout spending, the Pension Benefit Guarantee Corporation (the government pension plan insurer) has a deficit of $33.5Billion at the end of the first half of its fiscal year on March 31^st, compared with an $11.2 Billion deficit at the same time last year.

Hartford was first rumored to be selling its life insurance unit and then its P&C unit. Now they say nothing is for sale and they have received preliminary approval to receive $3.4 Billion in bail out money from TARP after they bought a Florida savings and loan last year.

PWC surveyed 694 employers and found that 20% of respondents had an in-network deductible between $400 and $999, while 11% had a deductible of over $1,000 on their health plan.

According to Families USA, which supports expanded health care coverage, $42.7Billion of medical bills went unpaid last year, which cost those people with insurance (and their employers) an extra $1,017 in premiums.

Information posted by the government on “Health Care Modernization” shows that one idea being heavily pushed is to eliminate or severely limit the tax deduction available for the employer’s cost of health insurance. Surprise! Teddy Chappaquidick is amongst those most adamant about this change. Tax cheat Tom Daschle was also elaborating on that idea at a recent meeting in Colorado Springs . Also being considered are elimination of tax favored status for FSA’s, HRAs and HSAs. No surprise that the government is going after the estimated $290 Billion in tax savings for employers to fund what Families USA calls a $42.7B problem after all the money the feds wasted on the bailouts.