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UltraLink - FOCUS...on benefits
January 2005
Consumer Reports Provides Prescription Drug Comparisons
Consumers Union, the publisher of Consumer Reports, is launching several health projects aimed at providing free, credible health information to consumers. The first of these, released in December, is Consumer Reports Best Buy Drugs, which uses evidence on the safety and effectiveness of prescription drugs and national data on drug prices to help identify the most effective and affordable medicines. Reports on the first 3 of what is expected to be about 20 drug categories - cholesterol-lowering agents, heartburn and acid reflux drugs and arthritis medicines - are currently available.
In partnership with the American Public Health Association and others, Consumers Union plans a vigorous outreach effort to increase awareness of the information among physicians, pharmacists, senior and low income groups and the general public.
Results of the initiative, which is funded by the Engelberg Foundation and the National Library of Medicine, can be viewed at www.CRBestBuyDrugs.org.
Group Health Insurance Cost and Enrollment Trends
Results of Milliman's 2004 Group Health Insurance Survey indicate 2005 rate increases of 11% for HMOs and 13% for PPOs. Milliman's survey is unique in that it asks plans to price a given set of benefits for a given demographic group, thus eliminating factors that can influence pricing and skew other survey results.
Mercer Human Resource Consulting reports on 2004 experience in its National Survey of Employer-Sponsored Health plans. Mercer's survey shows that average per employee cost across all plan types and tiers increased 7.5% in 2004, to $6679 (including both employer and employee contributions). Rate increases were more constrained among smaller employers (< 500 employees), however, at 5.5%. Among the reasons offered for this difference are that lower premiums attributable to the underwriting cycle affect smaller, fully-insured employers more than larger self-insured companies and that cost-shifting has been more pronounced in smaller companies. Thirty-one percent of smaller companies' PPO plans have in-network deductibles of $1000 or more, compared to only 6% of larger companies' plans.
PPO enrollment continues to grow. Fifty-eight percent of all covered employees enrolled in PPOs in 2004 (compared to 53% in 2003). HMO enrollment remained stable in 2004 at 27%, while Point of Service enrollment decreased from 14% to 10%. Out-of-area indemnity plans cover the remaining 4%. Mercer also reports that larger employers who are reluctant to push cost-shifting too far are expressing more interest in consumer-driven health plans (CDHPs). Although only 1% of employers offered CDHPs in 2004, 12% of very large companies (>20,000 employees) offered the plans. It is expected that by 2006 the percentage of large employers offering them will increase to 26%. To date, 16% of employees offered a CDHP as a choice have enrolled. The Mercer survey indicates that CDHPs cost about $600 less per year than HMO coverage.
General Electric Cuts Retiree Benefits for New Hires
In a move expected to influence corporate benefits nationally, The New York Times reports that General Electric is eliminating medical coverage for early and post-65 retirees for salaried workers hired after January 1, 2005. At the same time, the company is improving its matching contribution to retirement plans for those new hires. The cuts do not currently affect union workers and union leaders have already promised to fight any such changes to their members' benefits, saying that the profitable company has no reason for the cuts.
Mercer Human Resources Consulting reports that the percentage of employers providing retiree medical coverage has decreased by about half in the past decade. Among large employers, about 28% currently offer coverage to early retirees and 20% offer it to Medicare-eligible retirees. Small employers rarely offer any retiree medical benefits.
Doctors Lawsuit Against Insurers Retains Class Action Status
The Supreme Court has refused to hear an appeal by six health insurers that would have stopped a class action lawsuit against them. The suit is by doctors who contend that claims processing software used by insurance companies illegally downcodes claims to decrease reimbursement. Had the Court ruled that the case should not be a class action suit, the physicians likely could not have proceeded with the case since each doctor would have to bring suit individually. The Blue Cross Blue Shield Association, which faces similar lawsuits, noted that class action status brings pressure on the companies to settle rather than risk severe damage awards.
Aetna and CIGNA have already settled with the physicians; other insurers still named in the lawsuit include United Health Group, Health Net, Humana, Wellpoint, PacifiCare and Prudential. A trial is scheduled for September.
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