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

Unicare has announced it is pulling out of the commercial health insurance markets of Illinois and Texas . For Illinois group plans, coverage will be offered for similar plans at similar rates by Blue Cross Blue Shield of Illinois. For individual coverage, BCBSIL is offering similar coverage and rates with no medical underwriting if individuals accept the offer from BCBSIL prior to Tuesday, December 1^st. Unicare is owned by Anthem/Wellpoint (also a Blue Cross company). Since Unicare was thought to be profitable, this deal with BCBSIL looks to us like an agreement between the two Blues giants to stay out of each other’s markets. Unfortunately, that means fewer reasonable alternatives for coverage in Illinois and Texas . With the market share BCBSIL has in Illinois and their lack of accountability to anyone, it would be no surprise if their next move is to shed the brokers who have been sponging off the Blues override programs and rarely looking for viable alternatives for their clients.

According to Towers Health Cost Survey, employers will see medical benefit expenditures increase 7% in 2010, pushing the average PEPY medical cost to over $10,000. Employers will continue to fund 78% of the cost of benefits in 2010. The survey data includes 300 of the nation’s largest employers, which cover 5.2 Million employees and their dependents. The Cadillac health plans tax proposed in the Senate would mean that more than 50% of the employers surveyed would be paying that tax in 2013.

A Hewitt survey said group health care costs increased an average of 6% to $8,607 PEPY in 2009 and they are forecasting PEPY costs of $9120 in 2010. That survey covered 325 large employers. HMO costs rose 7.4% to $8,869 while PPO costs rose 5.2% to $8,264.

According to the Thomson/Reuters VP of healthcare analytics, the U.S. system wastes between $505 and $850 Billion every year. Just wait until the government gets a hold of it! According to the study, paper based medical records accounts for 6% of the waste. Unnecessary care and overuse to protect against malpractice exposure makes up 37% of the waste. Fraud makes up 22% of the waste and medial mistakes account for 11%. According to a recent 60 Minutes report, Medicare fraud costs up to $60 Billion a year.

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So the government and Medicare are the poster boys for controlling costs? The basic Medicare premium will increase next year by 15% to $110.50 a month while Medicare continues to reimburse at rates below costs, which shifts even more cost to the private sector.

A Grant Thornton survey released recently says that fully 77% of senior financial executives are most worried by employee benefits costs.

The Commonwealth Fund released a state by state (plus Washington , D.C. ) scorecard of avoidable hospital use and costs. According to Crain’s, Illinois ranked 49^th among states on avoidable use and costs, followed by New York and Louisiana and 44^th on a score that measures how well hospitals deliver basic care that avoids later complications.

While proposing plans for health care reform, our Senate and House have put forth bills that they say will increase the coverage for health care and wellness, insure more people and which will not increase costs. How absurd is that? If every insurance company representative could sell “more coverage for a better price”, they would be the wealthiest salespeople in our nation. While releasing these new plans, no major news source has noticed that the government’s recent Generic Information Nondiscrimination Act (GINA) basically cripples employer attempts to use wellness programs and disease management programs to control costs. Basically, any health risk assessment or disease management program that takes into account family medical history is not allowed to be used to provide better benefits or penalize an employee.

A recent analysis by the Associated Press showed that the “massive” profits enjoyed by the insurance companies in 2008 were 2.2%. Meanwhile, the insistence in the House and the Senate for a public option promises that costs will be driven even higher while politicians use doublespeak to describe cost savings (that will be made up of fines and taxes) that will come from their proposed programs. They hide Medicare cuts that will further drive up costs in the private sector while reducing the already few number of doctors who accept Medicare reimbursement levels. They have ignored the CBO estimate of a savings of $54 Billion by introducing tort reform, simply because the majority of the politicians are lawyers. There is absolutely nothing that we have seen in these programs that will control costs, while we have yet to discuss the constitutionality of the fines that would be imposed for not purchasing health care coverage. Simply stated, this is a sad state of affairs.