S&S Benefits.....Opinion,
Hearsay & News Review
Lincoln
National Corporation has completed their merger with Jefferson Pilot
Corporation and will operate under the brand name Lincoln National Group. Fiserv
has entered the Fortune 500 and is ranked 488 on the 2006 listing with $4.1
billion in revenues.
It
seems politics and practical economics are two items that will never mix.
Witness:
Massachusetts
has approved a mandatory health insurance bill to help cover the state’s
500,000 plus uninsured. The bill will require that businesses of over 10
employees that do not offer insurance to pay a fee of $295 per employee. The
bill requires all residents to be insured beginning on July 1, 2007 either by
direct purchase or obtaining coverage through their employer. Single adults
making $9,500 or less a year will have access to coverage with no premiums or
deductibles. Individuals deemed able, but unwilling to purchase health care
could face fines of more than $1,000 a year. The bill expects $385 million in
pledged federal funding in each of the next two years. The bill is expected to
cost $316 million in the first year and more than a billion in the third year.
Of course, this is probably a severe underestimation, since $1B / 500,000 equals
$2,000 per person, which is well below average costs nationally. We expect the
state will have more than a little trouble funding the measure and keeping any
kind of bond rating. It’s not just us that can’t see the economics working.
A commentary in the WSJ also mentions that the bill appears to fail the laws of
arithmetic.
A
similar law is being proposed in NY which would require all non-manufacturing,
non-agricultural businesses with 100 or more employees to provide $3 an hour in
healthcare benefits for every employee, or pay that in tax to the state. A study
by the Employment Policies Institute says that the bill, if passed, could cause
the loss of 100,000 jobs and that more than 83% of NY’s uninsured would still
lack coverage. If the jobs are lost, how will these people buy insurance?
A
study by Watson Wyatt of large companies shows that 4% of participants with
serious health conditions and claims in excess of $10,000 account for 49% of
health costs. 24% of plan participants have claims from $1,500 to $9,900 which
is about 40% of health costs and 72%
of participants comprise 11% of health care costs with claims of less than
$1,500. That is certainly food for thought in the age of CDHPs.
An
Aon study of 1071 employers showed that 32% offered two medical plan options and
37% offered at least three options. Only 19% reported that an HMO covered the
majority of their employees, 13% had a CDH plan and 72% offered PPO plans. In
2006, 37% implemented disease management and 36% conducted a vendor search to
reduce costs. 76% of survey respondents did not subsidize retiree health or drug
coverage for retirees over the age of 65.
In
Illinois
, the state program for the uninsurable population sets rates for those people
at between 143% and 135% of the
total cost of coverage. In 2004, total CHIP (Comprehensive Health Insurance
Pool) enrollment was 16,409. In 2004, premiums covered $64.4 million (66%) of
the cost. Insurance companies paid the assessments to cover the rest of the
costs. For fiscal year 2006 the assessment was over $37 million dollars that was
paid by insurance companies into the pool. That money will be offset with rate
increases to employers.
The
AMA is concerned with the decline in market competition with insurance
companies. They analyzed 294 metropolitan markets and in 95% of the areas, one
insurer had a combined market share of at least 30% and in more than one half of
the areas, one company had at least 50% market share.
Aetna
shares fell 18% on lower earnings which they blamed on their small business
segment losses, but they announced that premium increases later in the year will
offset that trend.
As
many of our readers know, from time to time S&S Benefits conducts informal
and formal surveys to determine needs for products or to inquire about reactions
to legislation, etc. It’s time for some feedback. It is always interesting to
see the results (or lack thereof). Our recent inquiry about identity theft
solutions in view of the FACTA legislation (and HIPAA Security for that matter)
received only one response from a group that had purchased protection. Our
inquiry and material about HIPAA Security rules which went into effect on April
20th seems to show that employers are thumbing their nose at the law,
with less than a handful or responses. That was not surprising, since we saw
similar results with the HIPAA Privacy legistlation. Our survey about broker and
carrier quality drew few responses as well and certainly not enough to draw any
conclusions worth publishing. For those that have responded, thank
you for your time.
