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

S&S Benefits Consulting, Inc.  219 Darien , Dundee , IL 60118   Phone: 847-428-5353, Fax:847-428-9876

Email click: mailto:jseiler@ssbenefits.net                                              http://www.ssbenefits.net/ May  2006 Issue

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 stateís 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. Itís not just us that canít 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 NYís 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. Itís 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.

To find out more about S&S Benefits Consulting, Inc. and how we can help your company, visit our website at www.ssbenefits.net and order our free CD. To be removed from the newsletter list, just send us an email or fax.