S&S Benefits.....Opinion,
Hearsay & News Review
Workers
underestimate the value of their health benefits according to a MetLife study.
Twenty-eight percent of full-time employees believe that their company spends
less than $1,000 per employee annually on medical and 49% believe the number is
less than $2,000. Only 27% correctly estimate their company spends $4,000 or
more per employee per year. Only 36% of employees give their benefits package
high marks and 60% don’t understand which benefits meet their needs. To quote
the movie Cool Hand Luke, “What we have here, is a failure to communicate.”
EBRI
finds that benefit and pay costs for
state and local government workers were 46% higher last year than they were
for private sector employees. The average cost per public sector employee per
hour worked was $3.49 for health insurance compared to $1.56 for the private
sector. For retirement and savings plans, government employees were at $2.23 per
hour compared $0.85 per hour in the private sector. Eighty-six percent of
government workers have health coverage compared to 66% in private business and
98% of government workers have some retirement savings plan compared to only 60%
in the business world. It’s good to know your tax dollars are hard at work!
Wachovia
Bank has purchased insurance broker Palmer & Cay. A.J. Gallagher finally
sold their maligned benefits TPA to the Parker Group which also bought American
Administrative Group.
An
article in BI reports that IRS Revenue Ruling 2005-24 clarifies that HRA
arrangements will lose their tax favored status if employers allow employees or
their dependents to take unused HRA balances in cash. The status would be lost
for all participants, even those who did not take cash. The ruling clarifies
that HRA money must be used for medical expenses.
An
AARP study which tracks price changes in what Rx manufacturers charge
wholesalers, shows that the average prices for
195 brand name drugs widely used by the over age 50 group increased by 7.1% in
2004. However, the same study found generic drug prices rising by only 0.5% for
75 commonly prescribed generic drugs. That’s down from a 13.3% rise in generic
pricing in 2003.
The
Illinois Attorney General has sued HealthCorp International and International
Association of Benefits for violation of Illinois Consumer Fraud and Deceptive
Business Practices Act. They are
charged with misrepresenting health discount cards as health insurance.
Both companies were doing business as IAB out of
Arlington
,
Texas
.
Cigna
Healthcare has hired four former Definity Health executives to key sales
positions. Definity was recently purchased by UnitedHealth Group. This is
somewhat of a mixed signal since it would seem that Cigna is intent on pushing
“consumer driven” plans while at the same time they have let many long time
representatives go from their sales offices. Is Cigna positioning itself for
sale?
Executives
from 270 insurance and reinsurance industries were recently surveyed by Know
Technologies for Reactions/US Insurer magazine. Some 70% revealed that they were aware of alleged practices of
bid-rigging and 21% said they “saw it coming.” Now isn’t that
reassuring? Also,
Sir Eliot Spitzer has Willis paying $50
million in restitution to settle an investigation into their practices
regarding incentive fees.
One of our
respected readers pointed out that S&S Benefits seems to have a bias against
“Consumer Driven” plans. To that we agree, simply because it is our opinion
that the consumer is not driving.
What we are saying is that the latest spin on these plans is usually just that,
uninformed spin. There are companies which may find these plans to be helpful,
but many will not. Bucking the trend may be bad for business, but we are more
concerned with providing the right advice, depending on the client situation.
Many times, we can provide a better solution.
Shifting
costs in the form of higher deductibles does not necessarily mean that a
consumer will make better choices. The result of cost shifting can also be a
consumer choosing not to receive needed care. Making a change to a low cost
generic as opposed to a high priced brand drug is usually a good thing. However,
we also recognize that certain medical conditions may require a $9.00 per hour
employee to take certain high priced brand name medications, or not take them if
they can’t afford them. Each
client’s specific situation dictates whether these plans make sense. Spin does
not. A recent survey of 28 insurers and health plan vendors representing 800,000
people enrolled in “consumer driven” plans also showed
that 44% published no cost information and that when that information
was provided, it was spotty. Fifty-six
percent published no quality information and only 11% published hospital
and physician quality information.
