We normally try to limit our newsletter to one page. However, with so many interesting and/or important announcements in the last month, we decided to go long. Hope you don’t mind.

A survey of large employers by Hewitt found that 75% provide or plan to provide disease management programs, 29% offer high risk appraisals of employees and 71% offer health education and training programs.

United Healthcare responds to HIPAA with a policy of not releasing large claim diagnosis data for fully insured groups from 2-99 employees. For larger fully insured groups they only permit the data to be released on renewal with a signed certification. UHC will release data to the employer for self-funded groups.

Cigna has announced a settlement of the 700,000 physician class action suit against them that reportedly will cost the company over $500 million for supposedly short-changing doctors for their services. Of that, doctors will reportedly receive very little, about $43 per doctor. Other costs were systems/services upgrades and attorney’s fees. UHC, Anthem, HealthNet and Humana continue to fight the suit.

Caremark has announced it will merge with AdvancePCS. If the merger is allowed to take place by the FTC, there will be only three major players in the PBM world (Caremark, Express Scripts and Medco).

Crain’s reports that Advocate (12/31), Provena Health (10/17) and St. Francis in Blue Island (12/1) have terminated their relationships with UHC. Advocate wants to negotiate on behalf of their docs, but UHC is apparently signing them up successfully. The street word is that the docs don’t really favor Advocate because Advocate wanted to put them at risk for services rendered. UHC reportedly has $100M revenue with Advocate of which $80M is hospital and $20M is docs. It is estimated that Advocate would lose $50M of that revenue if they leave UHC, but Advocate reportedly had a $47 M profit last year. Make sense? Advocate also apparently forgets how little leverage they will have with Blue Cross if they lose UHC. The dance continues.

In the meantime, Advocate Lutheran General Physicians have won the right to negotiate as a union. That’s all the world needs- unionized doctors.

Express Scripts says that drug ingredient costs rose 18.5% in 2002 to $585.60 PMPY compared to a 16.7% increase in 2001.

A Kaiser survey of 1800 companies says that premiums rose 13.9% from 2002 to 2003. Annual average family premiums increased to $9068 per year ($2412 paid by employee). Single coverage cost was $3383 with employees paying $504 (14.8%) of that cost. Thirty-three percent of insureds worry about keeping up with insurance costs vs. 21% who fear being victim of a terrorist attack.

A Deloitte survey showed a 14.9% increase in health costs to $6,022 PEPY. Rx costs were 16% of plan expenses. 45% of employers are controlling costs through plan design changes with 20% increasing employee contributions and 14% exploring lower cost vendors.

An EBN-Hay survey shows 51% of employers are very likely to increase employee contributions in the next year. The survey shows that 96% of benefit decision-makers rank health costs as their top concern, followed by recruiting and retention at 74%. The survey says health costs now average 8.8% of payroll.

Hewitt presented data at a recent Healthcare web summit that showed (SURPRISE!) 20% of the workforce uses 80% of the healthcare resources.

Federal employee health premiums for 2.2M workers plus 1.8M retirees and 4.2M dependents (8.2M people overall) total $26 Billion a year. Premiums average $7,202 a year and the government (that’s YOU and I) pay slightly more than 70% of the premium.

The American Association of Health Plans (1,000 members) and Health Insurance Association of America (400 members) have announced plans to merge their representation of insurers.

The latest Consumer Reports surveyed 42,000 readers about their health plans. The average satisfaction rating was 73 out of 100 with 12% stating they had trouble gaining access to care and 22% reporting difficulty seeing their doctors at all.

The BLS reports that 45% of employees are covered by an employer sponsored health plan as opposed to 63% in 1992-1993. In that same period, employee premium costs are reported as increasing by 75%.

Vista Health said it is seeking permission to close 231 bed Provena St. Therese in Waukegan.

2004 projected indemnity dental trend is 7.4% with PPO at 6.8% and DMO at 5.2%.

Nationwide HMO enrollment dropped for the 4^th straight year to 71.8M members from a peak of 81.1M in 1999. The total number of HMOs in operation fell to 454 from 500 in January 2002.

John Hancock is selling its group life business to Met Life and now Manulife of Canada announced it is buying the rest of John Hancock for $10.8B. The sale includes JH’s long term care business, life and financial planning. Demutualization is killing competition in the insurance company business. Companies convert to stock ownership and sell to the highest bidder.

Northwestern Medical Faculty Foundation and its seven medical group locations are terminating their contract with HMO Illinois (BC/BS) effective January 1,2004 according to a recent announcement from BC/BS.

Archer MSA plans deductibles can range from $1,700 (same as last year) to $2,600 (up from $2,500) for 2004 for single coverage and out of pockets cannot exceed $3,450 for self -only coverage (up $100 from last year). On the family side deductibles can range from $3,450 to $5,150 (up $100 on both) and out of pocket expenses cannot exceed $6,300 (up $150).

Safeco has announced that it plans to sell its life insurance and investments business and concentrate on property and casualty coverage.

Some average costs of transplants (hospital and physician costs only) from the United Network for Organ Sharing:

Heart-$300K; Heart/Lung-$300-$350K; Kidney-$75-$100K; Pancreas-$100K; Liver-$250-$275K; Lung-$200-$250K

Long-term care policies are being offered by more employers according to HIAA. 4,776 employers offered the benefit is 2001, a 20.7% increase over the prior year. However, participation rates are historically between 5% and 10%. With increasing health contributions for employees, apparently few can afford the benefit.

Word on the street is that Aon Risk is moving in on Aon Consulting for benefits work and hiring their own people. It should be an interesting internal power struggle that Aon Risk will probably win. In the meantime, Marsh- Chicago is being decimated by the hiring of their people by Aon.

Near North was so decimated by defections of clients and personnel that Hub Group reversed their offer to buy and the business instead is going in pieces on a split basis with other brokers. Apparently with Mickey Segal under indictment, few were scared of his usual hardball tactics in