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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/   October  2010 Issue

Well that “hope and change” thing called health reform just ain’t working out so well. Principal announced on 9/30/2010 that they are pulling out of the medical plan business. By our count, that is 49 medical insurance companies (see the list at http://www.ssbenefits.net/Ins.Co.Out%20of%20Business.pdf  ) that we can recall that have gone out of business in the last 20 years because the medical business is so profitable. UHC is taking over the renewals for Principal.

Humana has exited the business of writing child only insurance coverage and Anthem has suspended their offering of that coverage due to health reform. UHC’s Golden Rule subsidiary is also reported as pulling out of the child only market. As insurance companies are squeezed by health reform they are finding new ways to lower costs. Humana is canceling the appointments of insurance agents who do not meet minimum production standards. Blue Cross of IL has announced that non-contracted providers will be reimbursed at a pre-determined percentage of Medicare reimbursement rates. They also suspended new business and renewal quotes for a time, in response to threats from the Queen of health reform.

Yes, Queen Sebelius has threatened insurance companies that blame part of their rate increases on health reform (proving that the truth is not good enough). Basically, she has said she is going to put them under a microscope and possibly not allow them to be part of the health insurance exchanges she is building (that is, if there are any companies left after this law is fully implemented, but she hasn’t figured that part out yet). She also penned an op-ed in the WSJ that basically blamed the rising cost of insurance on insurance companies (not the cost of medical care), showing that she probably earned her dunce cap before she went to Washington when she was just the Kansas insurance commissioner.

If that wasn’t enough, Sens. Baucus and Rockefeller on Sept. 20th sent a letter to insurers demanding more transparency in the calculations of premium increases. They also threatened them if they made “false statements” about the effect of health reform on premiums. The letter went to Cigna, Aetna , Wellpoint, UHC and BCBSIL (Health Care Service Corp.). These are the same people who passed a bill using incorrect assumptions for costs (and as one person put it, they probably couldn’t balance their checkbook, much less understand a calculation of  renewal costs) according to the CBO.

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Health reform has not increased consumer confidence. Are we surprised? Eighty-eight percent of those surveyed in the 2010 Health Confidence Survey were extremely, very or somewhat satisfied with their health coverage. However, down from last year’s 59%, this year only 52% of individuals with employment based coverage were confident that their coverage with the employer would continue.

In a survey of 325 mainly self-funded employers, Hewitt found that medical plan costs (equivalent premium costs) are projected to rise 8.8% to $9,821 PEPY on average. PPO costs are projected at $9,408 PEPY. Employee premium contributions average 21.8% of total premium. Additional out of pocket costs for copayments, etc; averaged $1,934 (up 11.6%). In a Mercer survey, employers expect their medical plan costs to rise by 10.1% in 2011 and 47% of those plans surveyed are expected to lose grandfathered status in 2011 in order to make cost effective changes. Both surveys show that employers are expecting cost increases due to health reform. We are not sure if Queen Sebelius will write the employers a threatening letter also, since she can’t blame insurance companies for self-funding costs going up. Perhaps she’ll threaten Mercer and Hewitt for reporting on costs, or just let lap dogs Baucus and Rockefeller write the letters, since they have nothing else to do. The Heritage Foundation reports that the Queen has a lot of power though. In the 2,700 page bill, there are over 1,000 instances where Congress granted the Queen the power to regulate the health care industry.

A UBA survey of 17,655 plans with 12,316 employers found that the average rate increase last year was 7.3% and that PPO’s have 63.9% of all enrolled employees. CDHPs cover 15.4% of employees and now surpass HMOs (13.6%). A Kaiser survey of 2046 firms showed the average single premium to be $5,049 with employees contributing $899 a year. For yearly family coverage the average premium was $13,770 with employees contributing $3,997. Twenty –seven percent of employees were enrolled in a plan with a deductible of $1,000 or more, up from 22% last year.

The Obama administration reports that nearly 2,000 employers and unions have been accepted into the $5M Early Retiree Reimbursement Plan which reimburses high dollar claims on early retirees. That fund should be gone soon. Your taxes at work.