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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: jseiler@ssbenefits.net www.ssbenefits.net November, 2003 Issue

Despite increasing copays for emergency rooms, people with insurance are using the ER at a 24.3% increase over a six-year period. The Centers for Studying Health System Change said that only 46% of ER visits were considered an emergency (care required within 15 minutes of arrival) or urgent care (care required within one hour of arrival).

A major disease management program provider has agreed to refund $14 million to an unnamed client because the DM program was unable to validate performance outcomes under terms of the contract. Apparently the unnamed company is not too disappointed in the services, since they have signed a letter of intent to replace the existing contract with American Healthways. Whether the measurement standards were too difficult to validate or not is a question, but the new contract is said to eliminate AHís exposure to the customerís health cost increases. If nothing else, this tells us that although disease management may work, it is apparently no more of a silver bullet than HMOs or CDH plans.

The Organization for Economic Co-operation and Development released a report saying that the portion of the U.S. GDP spent on healthcare was 13.9% in 2001. No other OECD nation apparently spent more than 10.9% of their GDP. Given the quality of care in this country, that really isnít too bad. A 2002 PricewaterhouseCoopers study found that litigation, mandates and fraud drove 27 cents of every new dollar of healthcare spending. The AAHO said that costs will continue to rise until the practice of evidence based medicine and adoption of best practices becomes standard. A recent RAND study said that only about half of patients receive best practice treatment. Aetna is starting a new network of physicians and surgeons in certain specialties who are the most efficient providers in the market.

The National Center for Policy Analysis found that almost 1/3 of the uninsured live in households with annual income over $50,000 and 1/5 live in households with income above $75,000. According to the census bureau, 15.2% of the US population lacked health insurance. The number of uninsured with annual incomes below $25,000 fell by 17%.

United Healthcare has worked out itís differences with Provena Healthcare (6 Chicago area hospitals) and has accepted termination of St. Francis of Blue Island as part of the UHC Illinois network. Advocate and UHC remain at loggerheads.

Hewitt is predicting a 12.6% average increase in health care costs for 2004 (less than the 2003 14.7% rate). HMOs are predicted at 13.5%, PPO and POS at 12%, Indemnity at 12.5%. According to Wells Fargo, the average single PPO rate is $3,750 PEPY and family is $9,900. The average is that employees pay 23% of the cost.

The Dept. of HHS has stated that FSA/HRA debit cards are exempt from HIPAA rules (electronic data interchange (EDI)) rules. This helps clear the way for their usage under these programs.

UHC is acquiring Golden Rule Life Insurance Company. Golden Rule was a pioneer in MSA accounts. To repeat our earlier bulletin, Anthem and Wellpoint are merging. Fortis has filed for an IPO under itís planned new name, Assurant, Inc., which will be domiciled in Delaware.

According to Small Business Digestís Fall Survey of 2,000 small firms, 20% plan to significantly change their employee medical programs in 2004. Fifty-six percent contributed half or more of employee healthcare costs with 32.3% providing all or almost all of the premiums. Most planned to change benefits rather than increase premium costs.

According to a Watson survey, only 18% of corporations plan to pass on a larger share of benefit costs to employees (down from 56% last year).

Cigna conducted a survey of employees and 43% surveyed rated themselves a "C" or lower on their benefits knowledge. 83% say plan affordability is a very important consideration. We think the 57% who gave themselves and "A" or "B" are more than slightly optimistic about their knowledge.

At the end of Gray Davisís term in the Land of Fruits and Nuts (CA), he signed legislation saying that CA employers with 200 or more workers must offer health insurance by 2006. Employers with 50-200 employees must do so by 2007. Less than 50 employee groups are exempt. An employee is defined as someone who works 100 or more hours per month for 3 months. If the employer does not offer coverage they must pay into a state fund for the same purpose.

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