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

Why be like everyone else?

The largest drivers for rising health care costs were cited in a recent report by the AAHP and PricewaterhouseCoopers that found the average 2001 increase to be 13.7%. "Runaway lawsuits, a cascade of duplicative and conflicting regulations, and the unintended consequences of 1,500 state and federal mandates make up 27% of the increase in health care costs," according to the report. Fraud and abuse made up an additional 5%. Just wait to see what this survey says if HIPAA privacy compliance doesn’t change.

The Indiana Department of Insurance has broadened the rule requiring insurers to share claims data on group health plans with the employers that pay for them. Small businesses with as few as two employees now have the right to that data, which includes incurred, paid and pending claims and a description of those claims of over $5,000. This is one law that would be useful for employers in all states, but it makes too much sense Many carriers demand claim information for underwriting purposes, but then refuse to provide the same upon renewal. BC/BS of IL is notorious for this, even with groups from 100-125 employees.

Express Scripts continues to grow by acquiring National Prescription Administrators for $450 million. NPA largely served union and government workers as opposed to Express Scripts mostly corporate business.

CALPERS recommended approving 25% increases in HMO premiums for the pension fund’s 1.2 million members. PacifiCare and Health Net are being dropped from the program. The HMOs gave little ground in negotiations, which is not surprising since CALPERs volume is no longer considered worth the cost, especially given the rich plans that are offered which are out of step with much of the rest of the market. The HMOs that were dropped by CALPERS received the dividend of increasing stock prices when the decision was announced.

New federal standards on allowing communication of benefits electronically is helpful to those in a totally wired worked place for all employees. However, the standards forbid employers to use kiosks as a substitute for those who don’t have computers.

We don’t normally cover workers comp in this letter, but found this interesting. Liberty Mutual says that disabling workplace injuries cost employers $40 Billion in direct wage replacement and medical payments, while generating indirect costs between $80 and $200 Billion. The 10 most prevalent injuries generated 86% of the direct costs. The first six on the list are (dollars in Billions): Overexertion ($10.3), Fall on the same level ($4.6), bodily reaction ($3.8), fall to a lower level ($3.7), struck by an object ($3.4), repetitive motion ($2.7).

Anthem has announced that it is acquiring Trigon Healthcare (the largest managed care provider in Virginia). The acquisition will have the combined company at 10 million medical members. UnitedHealth Group is the largest HMO with 16 million and is followed by Aetna with 15 million members.

United Healthcare has joined the list of carriers that are reducing their out of network benefits. As word has it, UHC has reduced their out of network covered charge level to Medicare’s reimbursement rate. This will substantially raise out of pocket costs, by reducing what is covered, leaving the patient to fight with the doctor over non-covered expenses.

A new Hewitt survey of 700 employers shows that employers are only willing or able to bear part of the expected increases of 13-14% a year for the next five years. Interestingly, 30% of those surveyed said that they could absorb a 10% annual increase and 18% said they could cover 8% increases. Meanwhile, only 11% of employers said they could accommodate an annual increase of greater than 10%. Two percent of respondents said they were already maxed out.

In dealing with the increases, 43% would increase employee contributions as a primary focus. Cost sharing in benefits was close behind as a primary focus, drawing the interest of 37% of respondents. Most employers (72%) believe that health benefits were the key to attracting and retaining (66%) employees.

There appear to be no silver bullets to holding down health costs in general. Most alternatives being touted such as consumer driven models are nothing more than sophisticated cost shifting that could complicate the experience of the plan (for employers with more than 100 employees) and hurt those that are less healthy (20% of the population of most plans).