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

Why be like everyone else?

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

Email: jseiler@ssbenefits.net www.ssbenefits.net

Volume 4 Issue 7 Street Talk HAPPY HALLOWEEN!! November, 2002 Issue

The 2002 Health Confidence Survey conducted by EBRI says that 55% (down from 57%) are satisfied with the care they receive. 38% are dissatisfied with the cost and 44% are unsatisfied with the amount of health costs not covered by insurance.

The DOL is teaming with the IRS to go after non-filers of 5500 forms. Penalties can be up to $1,100 per day per report. In 1999 the PWBA collected $8 million from delinquent filers. They are going for more this year.

Hartford is rumored to be selling its stop loss business. UHC is rumored to be the buyer.

A Towers survey says that the average large company will pay 15% more for health costs in 2003. The survey of 268 companies said employees will pay 22% ($160) for family health coverage, 19% for single coverage ($48). A Hewitt survey of 2000 employer plans predicts a 15.4% increase (HMOs-16%, PPO/Indemnity15%). The national average cost of healthcare will rise to $6,295 from $5,456 annually.

A survey of 425 HR managers by The Discovery Group reveals that only 48% feel that senior management respects their activities. Just over 50% feel like they have proper decision making authority and only 35% believe they have an adequate budget to accomplish their goals.

According to JAMA: Rx- if you double copays from $5G/$10 B Ėdecrease Rx cost by 32.9%. Add additional non-preferred copay of $30 to decrease costs another 4%. Mandatory generic substitution in a two-tier plan saves 8%.

In small group news: Unicare will be cutting off brokers from selling their products unless they meet production, persistency and loss ratio goals in small group, so we predict brokers will be showing less of Unicare. Just to make it a little harder on small groups, Humana will be requiring employee health questions on up to 50 life groups.

Surveys can seemingly contradict each other. A Towers survey of 125 companies said 89% of businesses offer web enrollment, but a survey by LIMRA found that just 16% of respondents thought web enrollment was important. Perhaps 89% are doing it, but it is not important?

Preferred Plan, Inc., one of the largest PPOs in Chicago was sold to the Chandler Group out of Ohio. The PPO continues to suffer in the face of TPAs using PHCS and other national networks with greater discounts than PPI.

Aetna has announced it will cut 9% of its work force to mirror its shrunken health plan membership. Aetna is also terminating its contract with Express Scripts for mail order Rx and will manage their own drug programs. Aetna has also removed the poison pill from their bylaws that prevented bidders from buying the company. Cigna slashed its quarterly earning estimates, blaming failure to gauge higher health costs.

StanCorp Financial (Standard Insurance of Oregon) has completed its $75 M acquisition of TIAA and acquired 1,800 group contracts with 650,000 lives. Thatís nice, but we miss them being competitive on regular groups.

A Harris poll shows that 26% of consumers have seen information that rated hospitals and 22% have seen information that rates health plans or doctors. Only 1% of those that have seen the information have made a change based on the information. What does this tell us about consumer driven health plans?

UHC says they will reimburse for Canadian drugs with AARP plans. To date, a study by the Burchfield group says that importing drugs from Canada is illegal. The FDA has stated that they are not in a position to guarantee equivalent safety and efficacy. PBMs are against Canada drugs since they canít capture drug interaction and drug utilization info and Disease Management potential is limited.

The Center for Studying Health System Change (HSC) says that inpatient and outpatient hospital care drove the 10% increase in health spending in 2001. Hospital charges rose by 12%, representing 51% of the increase in spending. One third of that was due to higher payment rates and two-thirds was due to more services used. Physician costs rose by 6.8%, representing 28% of overall spending.

Hereís a quote from Tony Miller, the CEO of Definity Health (from BI) which is "pioneering" consumer driven plans. "We as consumers canít evaluate any kind of price, quality, service tradeoffs" with healthcare. You may be right Tony, but doesnít that statement contradict the premise of your company?

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