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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                                              http://www.ssbenefits.net/   November 2011 Issue

A Business Insurance report explains why self-funding is growing in the smaller markets. The exemptions from state mandates, smaller percentage of premium taxes and escape from community rating type requirements and loss ratio requirements of Obamacare are the most likely reasons why D.W. Van Dyke & Co, is showing a more than 10% jump in stop loss coverage sales this year. Currently 82.1% of employers with 500 or more employees self-fund, so the major growth in self-funding is coming from smaller companies.

First, as we reported last month, Queen Sebelius told us that the CLASS (Long Term Care) part of Obamacare  was no longer on the table. The following week an administration official told The Hill that the administration still supported CLASS and that Obama was still committed to making the program work. That was probably to fend off critics who knew the $70 billion in “budgetary savings”  in CLASS was supposed to fund Obamacare. Now the $70 B has to be accounted for elsewhere, which would be impossible. That part of Obamacare was officially championed since it was a dream of the now passed Teddy Chappaquiddick. The news media has officially tanked on the subject of the CLASS savings for Obamacare, but we have not. We hope the budget Super Committee (not constitutionally sanctioned either) deal has not tanked on the subject as well, since they will need to find additional savings in their negotiations.

A report by Mark Farrah Associates says that total medical expenses grew just 1.7% in 2010 vs. 4.9% in 2009. The report says that in 2010, fully 86% of all fully insured health insurance premiums went towards medical expenses, down 1.5% over 2009. The report was compiled from statutory filings health plans submit to state regulators and the NAIC for the years 2002 to 2010.

However, Aon and KFF studies still show a greater upward trend in health care costs. KFF found that premiums for family health coverage rose an average of 9% to $15,703 in 2011 compared to a 3% increase in 2010. A Hewitt study of 371 large and mostly self-funded employers found that health benefits costs climbed 7.5% to an average of $9,792 in 2011 and are expected to grow another 7% to $10,475 in 2012. The KFF study included more fully insured and small and mid-sized firms.

Consumer Reports says health care utilization is down and that almost half of the 1,226 consumers responding to their survey didn’t fill prescriptions, took less medicine than prescribed or failed to undergo a medical test advised by their physician. That compares to the 39% who reported the same last year. KFF also reported that 31% of employees are enrolled in plans with a deductible of $1,000 or more, up from 27% in 2010. Aon-Hewitt reports that employee out of pocket costs will grow 13.4% in 2012. Those costs rose 18.7% to $2,007 in 2011.

Can anyone take away the message that medical costs are growing, or is the Obama administration the only one that thinks that costs are growing simply due to insurance companies?

 Meanwhile, the administration can’t figure out why employers are not hiring. Brilliant.

If you wish to be added or removed from the distribution of this newsletter, please email jseiler@ssbenefits.net

The drafters of Obamacare’s uniform coverage reform summary requirements say the law will cost insurers and TPAs about $156 million over the next three years to develop, update and provide the SBC (Summary of Benefit Coverage) and glossary to applicants and enrollees. The estimate is for $25 million in 2011, $73 M in 2012 and $58 M in 2013.

A new Mercer survey had 44% of employees reporting they were asked to pay more for health benefits in the last 12 months. Yet, 46% said their health benefits were definitely worth the cost. That compares to 38% in 2010. Nearly 8 out 10 reported that benefits were the reason why they work where they do and 91% said getting health benefits through work was just as important as getting a salary.

An AMA survey shows that there is little competition for fully insured business in 83% of metro markets surveyed. In one half of the markets, at least one insurer had a commercial share of 50% or more, and in 24 of 48 states in the study, the two largest insurers had a combined commercial share of 70% or more. This is part of the reason more smaller groups are looking at self-funding.

The Supreme Court should decide on Nov. 10 whether it will review Obamacare this term. An announcement is expected Nov. 14.

The Obama administration has announced that premiums for Medicare Part B coverage in 2012 will be $99.90 a month for most beneficiaries, which is a smaller increase than expected. A Social Security COLA of 3.6% will make up for the increase.