May 16 – by Leila Morris
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IN CALIFORNIA
• State Senator Questions Consumer Watchdog Funding
• California Healthcare Costs Among the Lowest
• Assembly Passes Bill to Integrate Healthcare Regulations
HEALTHCARE
• How Lower Copays Are Driving Utilization
• Are Your Clients Missing Out on the Health Coverage Tax Credits?
• Children with Private Insurance Get Different Emergency Care
MERGERS & ACQUISITIONS
• BenefitMall and CompuPay Merge
• Cigna Acquires Supplemental Business
NEW PRODUCTS
• Critical Illness Books
• Absence Management
• Term Life Insurance
• Online Nutrition Program for the Workplace
• Dental PPO
LIFE INSURANCE
• Many Overestimate the Price of Life Insurance
DISABILITY INSURANCE
• A Lack of Disability Education, Savings Puts Americans at Risk
FINANCIAL PLANNING
• Survey Reveals Relationship between Women’s Financial Situation, Stress Levels and Overall Health

IN CALIFORNIA

State Senator Questions Consumer Watchdog Funding

State Senator Juan Vargas (D-San Diego) called on the California Department of Insurance to take action on a state program that allows consumer groups to intervene in insurance rate cases.

He plans to ask for a hearing on the program, according to The California Majority Report.

According to the Department of Insurance, just one group has dominated the Insurance Department’s intervenor program since Prop 103 was passed [Consumer Watchdog].  It has been the only group to participate since 2007 and has charged more than $6.2 million in fees. [Consumer Watchdog is behind a ballot that would give the state's insurance commissioner the authority to modify or deny excessive rate increases].

Vargas said, “The Department should broaden its outreach to all Californians that have a legitimate interest in their insurance rates. We must get the facts about why more consumers are being excluded from the process.”

California Healthcare Costs Among the Lowest

Health spending represents a significant share of California’s economy, but the amounts spent on medical care rank among the lowest in the nation, both per person and per Medicaid enrollee, according to a report from the California HealthCare Foundation (ChCF). California’s 2009 per-capita health spending of $6,238 was the ninth lowest in the nation. In comparison, U.S. spending was $6,815 per capita.

Health spending accounted for 12% of California’s economy, which is a smaller share than most states or the nation. Medicare spending per enrollee in California was slightly higher than U.S. levels in 2009 while Medicaid spending per enrollee was much lower than the nation. However, health spending in California reached $230 billion in 2009, which is triple the 1991 levels.

Since reaching its peak of 9.7% in 2003, the pace of growth in health spending has been decelerating. By 2009, annual health spending grew 4.5%, similar to the US rate of 4.6%. This is the slowest pace on record since 1999.

Hospital and physician services accounted for the majority of spending, totaling 63%. Medicare and Medicaid accounted for nearly 40% of California health spending, up from 27% in 1991. For more information, visit www.chcf.org/almanac.

Assembly Passes Bill to Integrate Healthcare Regulations

The California State Assembly passed a bill that would require health insurers to notify the Department of Insurance at least 75 days before terminating a provider group or hospital contract. This would allow the Department to review the notices to be mailed to consumers and act if the insurer fails to maintain an adequate provider network. At least 60 days before cancelling a contract with the medical provider group or hospital, health insurers would be required to send a written notice to all policyholders who’ve undergone treatment with that entity during the past six months. The measure is intended to help prevent consumers from unknowingly seeking care that will have higher (out-of-network) costs than expected.

AB 2152 would also align the Insurance Code and sections of the Knox-Keene Act, which is the Health and Safety Code used by the Department of Managed Health Care. The Insurance Code authorizes health insurers to contract with providers to offer services at alternative rates of payment. These contracts are the basis of provider networks in PPOs. “This bill provides for a level competitive environment and will ensure that consumers receive equivalent, strong consumer protections whether they purchase a health insurance product that is regulated by the Department of Insurance or the Department of Managed Health Care,” said Assembly Member Mike Eng.

In addition, the bill would require improved disclosure of the benefits in a health insurance policy, a description of any limitations on the policyholder’s choice of providers, and a statement of how reimbursements will be made to participating providers. The bill now heads to the State Senate for consideration.

HEALTHCARE

How Lower Copays Are Driving Utilization

Relatively low co-pays are narrowing price difference between primary care  and care in emergency rooms, urgent care facilities, and specialist’s offices. As a result, employees and their families are making more trips to theses other settings for care, according to the 2012 Medical Plan Trends Report conducted by HighRoads andCorporate Executive Board.

The average ER visit co-pay is just $76. This relatively low cost may be leading employees to visit the hospital for symptoms that a primary care physician or other provider could easily treat.  For example, toothaches and sprains are among the 10 most common conditions for which Americans visit hospital emergency rooms.  While some ER visits are also likely attributable to patients who lack insurance, the steady increase in visits appears predominantly to be tied to co-pay costs.

The average plan has a relatively minimal price differential among urgent care, in-network co-pay ($32), and primary care physician (PCP) co-pay ($17). As a result, employees may be choosing urgent care facilities simply for convenience.

Similarly, the price gap between specialists and PCPs is narrowing. From 2010 to 2012, the price differential has dropped from 82% to 35% higher for specialist visits. iPCP.

Ania Krasniewska, senior director of CEB said, “Employees are basically acting as price-sensitive consumers and going for what they perceive as the best value and convenience for the price. However, it also sounds a warning that some visits to ER and urgent care facilities should be handled at the more cost-effective primary-care level. Not only does this affect cost to the employee in the end, but also in large quantities, this significantly affects the cost to the organization.

The study also reveled the following about copays:

• Roughly one-third of plans charge no co-pay for cancer screenings.

• Nearly 40% of plans charge low ($10 or less) co-pays for children’s preventive care visits.

• Almost all employers report that non-employee dependents are responsible for at least 40% of the organization’s health care costs.

• It costs employees nearly twice as much to order a prescription through their plan’s mail order option than through a retail pharmacy.  While mail-order co-pays are higher, they pay for a greater quantity of the prescription medication (typically 90 days versus the standard 30-day retail prescription). For more information, visit highroads.com.

Are Your Clients Missing Out on Health Coverage Tax Credits? 

Many eligible small businesses are missing out on a tax credit for offering health coverage  simply because they don’t know that it exists, according to a report by Families USA. Ron Pollack, Executive Director of Families USA said, “The best way to serve small business owners is to educate them about this provision so they can participate in and benefit from it.”

In general, businesses that offer health coverage and that employ fewer than 25 full-time middle-class workers are eligible for a tax credit of up to 35% of the cost of premiums for their workers. In 2014, the size of the credit will increase to cover up to half of the cost of health insurance provided to workers.

The tax credit was included in the Affordable Care Act to help the smallest businesses offer coverage. In 2011, only 71% of small businesses with 10 to 24 workers offered coverage to their workers; among small businesses with fewer than 10 workers, only 48% offered coverage.

Forty percent of  small businesses that are eligible for the tax credit are eligible to receive the maximum tax credit when they file their 2011 taxes.

The total value of the tax credits that are available to eligible small businesses for 2011 is more than $15.4 billion, an average of $800 per worker. The total value of the tax credits that are available to small businesses eligible for the maximum credit is more than $6.1 billion, an average of $1,066 per worker. For more information, visit  www.familiesusa.org

Children With Private Insurance Get Different Emergency Care

Children with public or no insurance are almost 25% less likely than those with private insurance to undergo testing, receive a medication, or undergo any procedure in the emergency room, according to a report in The Journal of Pediatrics. Children with public insurance are three times less likely to have a primary care physician; children with no insurance are eleven time less likely.

Researchers reviewed 84,536 emergency department visits of children under 18 from 1999 to 2008. Over the 10-year period, 45% of the children had private insurance, 43% had public insurance (Medicaid or State Children’s Health Insurance Program), and 12% had no insurance. Although children with public insurance are 20% more likely to be diagnosed with a significant illness compared to children with private insurance, there was no difference in the level of treatment based on insurance status among children with significant illnesses.

It is unclear whether the insurance-based differences represent under treatment in children without private insurance, over treatment in children with private insurance, or appropriate care for all. Because emergency department physicians are salaried or paid by the hour, it is uncertain how or why a child’s insurance status could be associated with care decisions in the emergency department. The authors note that further studies are needed to assess insurance-associated outcomes. For more information, visit www.jpeds.com.

MERGERS & AQUISITIONS

BenefitMall and CompuPay Merge

BenefitMall and CompuPay announced a merger of the companies through an equity financing led by Austin Ventures. The investor group also includes HarbourVest Partners. The combination of BenefitMall and CompuPay creates a leading national provider of employee benefit and payroll solutions. The company will offer complete health insurance, benefits, payroll, and related products and services to small-to-medium sized businesses and their employees throughout the United States. The transaction closed on May 1, 2012, and financial terms were not disclosed.

BenefitMall, headquartered in Dallas, is the largest general agency in the United States. CompuPay, headquartered in Miramar, Florida, is the second largest privately held payroll processor. Charles Lathrop, CEO of CompuPay, will be the president and chief revenue officer of the company. Both DiFiore and Lathrop will join the Board of Directors of the Company. Scott Kirksey, CFO of BenefitMall, will be the CFO of the company and will join DiFiore and Lathrop to form the company’s Executive Committee. DiFiore said, “In addition to the clear strategic benefits of combining two highly complementary organizations, the integration of benefits and payroll will deliver substantial value to…our clients, client employees, brokers, channel partners, and carriers.”

Cigna Acquires Supplemental Business

Cigna is acquiring the Great American Supplemental Benefits Group, which is now part of American Financial Group. It is one of the largest manufacturers, distributors, and marketers of supplemental health insurance products in the United States. The transaction is expected to close during the second half of 2012. “Great American Supplemental Benefits is an ideal strategic fit with Cigna’s growth plans to expand our presence in the U.S. individual and seniors segments through a broad range of supplemental health solutions,” said Thomas Richards, president of Cigna Individual and Family Plans. He said that the combination provides Cigna the following opportunities for additional growth:

• Expand individual supplemental benefit offerings.

• Bring a scaled offering to the highly attractive senior segment, with strong capabilities in Medicare supplement and other supplemental benefits.

• Extend Cigna’s global direct-to-consumer retail channel.

• Enhance Cigna’s  distribution network of agents and brokers.

For more information, visit www.cigna.com

NEW PRODUCTS

Critical Illness Books

Authors Edward L. Mueller, Jr. and Laura Spencer have co-written two guides: “A Consumer’s Guide to Critical Illness Insurance – A Living Benefit” and “Keeping Your Gold in the Golden Years.” The goal is to inform readers of the importance of purchasing critical illness insurance coverage and to explain why having health insurance  isn’t sufficient to ward off financial devastation in the event of a critical illness. For more information, visit www.cihelp.org.

Absence Management 

Matrix Absence Management added the Android Smartphone operating system to its library of services and apps. Employees can quickly and easily report intermittent absence from work. It also speeds the processing, management, and payment of benefits. Rounding out the suite of tech-enabled reporting options are an iOS app for the iPhone and iPad, an interactive voice response system, and a secure Web application. For more information, visit www.matrixcos.com

Term Life Insurance

Minnesota Life Insurance Company will replace its existing term product, Advantage Elite, with Advantage Elite Select in all states except New York, effective May 21. With the launch of Advantage Elite Select, Minnesota Life also will introduce Express Issue, a streamlined process that allows clients to purchase life insurance in a matter of days. It is available on policies for $250,000 or less; offers a three- to five-day turnaround after the phone interview; and requires no physical exams or medical blood work. Advantage Elite Select also offers shortened conversion periods. For an additional premium, the insured can extend the conversion period for the full duration of the policy or age 75, whichever is earlier. For more information, visit www.securian.com.

Online Nutrition Program for the Workplace

Kaiser Permanente launched an online nutrition program designed to help employees improve their daily eating habits by including more fruits and vegetables. With Kaiser’s Mix It Up program, employees sign up online with the goal of eating at least five servings of produce each day. Easy-to-remember daily food selections include more than 120 possible fruits and vegetables. Participants click on images of the foods they’ve eaten, drag them to a virtual blender and process their choices. Mix It Up does the rest by totaling numbers. For more information, visit
http://www.youtube.com/watch?v=pKnUmSoBTjw

Dental PPO 

Assurant Employee Benefits and Aetna are extending their PPO network access agreement through July 2015. Customers of both companies will have access to dentists contracted with the Aetna Dental Access network and Dental Health Alliance, L.L.C. , the dental PPO operated by Assurant Employee Benefits. For more information, visit www.assurantemployeebenefits or www.aetna.com.

LIFE INSURANCE

Many Over Estimate the Price of Life Insurance

Many Americans are dissuaded from buying adequate life insurance because they over estimate how much it will cost, according to a study by LIMRA and the LIFE Foundation. They surveyed more than 2,000 Americans in January 2012. Twenty percent of those with some life insurance said they did not have enough coverage as did 41% with no life insurance also.

The survey respondents who said they needed more life insurance coverage estimated it would cost around $400 a year for a $250,000 term-life insurance policy to cover a healthy 30-year-old for a term of 20 years. But the real annual premium is closer to $150 . “Term life insurance can provide beneficiaries with a very cost-effective form of financial protection.” For more information, visit http://www.iii.org

DISABILITY INSURANCE

A Lack of Disability Education, Savings Puts Americans at Risk

Two out of three Americans don’t know what’s covered by their disability plan, according to a survey by WellPoint Inc. In addition, three quarters of the survey participants don’t have disability insurance and one in 10 actually worry that they will jinx themselves if they purchase it. This same survey found that most Americans need more information about disability insurance and many who don’t have coverage could not survive financially if an accident happened.

Two-thirds of the survey participants don’t have enough savings to cover living expenses for three months and nearly a third still live paycheck to paycheck. Most of the survey participants worry about their future health; half say they can’t afford to be out of work due to an injury or illness; and the same number report they would not have enough to cover being out of work three to six months.

There are still many misconceptions around disability insurance. According to the survey, half of the survey participants don’t know that pregnancy can lead to needing short-term disability coverage. In fact, 20% of disability claims are due to normal pregnancy and 9% are due to complications from pregnancy.

Four in 10 survey participants also said that they don’t know the length of time covered by long-term disability insurance. In fact, the average long-term disability claim lasts 31.2 months. What’s more, nearly one in three women and one in four men can expect to suffer a disability that keeps them out of work for 90 days or longer at some point during their working years. Another four in 10 Americans surveyed believe disability insurance only covers injuries or accidents.

Surprisingly, about 95% of disabilities are caused by illnesses rather than accidents. For more information, visit  www.wellpoint.com.

FINANCIAL PLANNING

Financial Stress Affect Womens’ Overall Health

There is a strong relationship between women’s level of stress, how they feel about their financial situation, and their overall health, according to a survey by Aviva USA in collaboration with Mayo Clinic.

Three out of four women say they are somewhat, very, or extremely stressed. Eighty-two percent of those who are extremely stressed say they are uncomfortable with their financial situation. In addition, 58% of women say they gained weight in the past 10 years. That number jumps to 68% among women who say they are extremely stressed.

Dr. Philip Hagen, medical director of Mayo Clinic said, “Most of the women in this survey reported feeling healthy, but they also reported significant rates of two important health risk factors — weight gain and stress — that contribute to chronic health conditions and a poorer quality of life in the long-run. The good news is we know how to lower these risks with simple lifestyle changes we can make through small steps, but by doing it every day. The message here is that lower risk means better health and it’s doable.”

The survey also revealed the following:

• Only about a third of women are comfortable with their financial situation.

• The financial situation is the primary factor contributing to stress for women ages 30 to 54 while women ages 55 to 70 list family/relationships as their top stress factor.

• Women who say they are extremely stressed are 3½ times more likely to be uncomfortable with their financial situation than those who are not at all stressed.

• One out of four women ages 30 to 70 rarely or never gets exercise.

• Fifty-one percent of women ages 30 to 54 say they sometimes feel overwhelmed when thinking about preparing for retirement, as do 42% of women 55 to 70.

For more information, visit www.youtube.com/AvivaUSA.

RETIREMENT PLANNING
• Healthcare Costs Terrify Rich Pre-retirees
• Linking Wellness Plans to Retirement Planning
• Women Are Saving More in their in 401(k) Plans
CALIFORNIA
• High-Performance Networks in California
DISABILITY
• Cancer, pregnancy are leading Causes of disability
EVENTS
• Insurance Marketing Trade Show
HEALTHCARE
• Powerful Hospitals Avert Cost Cutting by Insurers
• The Truth About the Individual market, Part Two
NEW PRODUCTS
• Fund Lineup
• Dialysis Cost Containment for Self Insured Plans
• Group Term Life
• Retirement Discussion Tool Kit

RETIREMENT PLANNING

Healthcare Costs Terrify Rich Pre-retirees

A Nationwide Financial survey finds that nearly half of soon-to-be-retired, high-net-worth Americans say they are “terrified” of what health care costs may do to their retirement plans and nearly three in four say health care costs going out of control is among their top retirement fears. Retirees’ access to employer-sponsored health insurance continues to decline and there are potential changes in Medicare benefits due to the program’s projected funding shortfall.

However, among Americans with at least $250,000 in household assets, 38% of those nearing retirement have not discussed their retirement at all with a financial advisor. Of those who have, only one in five discussed health care costs in retirement not covered by Medicare. John Carter, president of Nationwide Financial Distributors said, “Even those who have diligently saved for their golden years are not prepared for the reality of health care costs in retirement and don’t really understand how Medicare works. Too many assume their employers will continue to pay their premiums during retirement or Medicare will cover all health care expenses.”

The soon-to-be-retirees lack confidence that financial advisors can help with this challenge; with 59% saying that most financial advisors are not equipped to discuss retirement health care costs with their clients. However, this lack of confidence may be unfounded. Two-thirds of those who discussed these issues with advisors said that the advisors were helpful in discussing information about their health and estimating their health care costs in retirement.

When it comes to Medicare, only one in five is confident in their knowledge of Medicare coverage. More than half say it is very or extremely important that  they educate themselves on Medicare coverage when planning for retirement. Soon to be retired Americans who plan to enroll in Medicare estimated that Medicare will pay for 68% of their health care costs in retirement.However, Medicare only covers about 51% of the expenses associated with health care, according to the Employee Benefit Research Institute.

When asked how much they anticipate spending each year on health care in retirement, they said, on average, $5,621. A more accurate figure is nearly $11,000 a year. Kevin McGarry, director of the Nationwide Institute for Retirement Income said, “Workers do not think they will ever need long term care. But studies have found that 30% to 40% of those reaching age 65 will use nursing home care at some point. Americans also mistakenly believe that Medicare covers long term care; it does not.”

The survey also reveals an opportunity for advisors: 43% of soon-to-be-retired Americans plan to discuss health care costs with a financial advisor. Twelve percent are planning to switch financial advisors, but 54% of them would be more likely to stay with their current advisor if that advisor can help them plan for covering health care costs in retirement or discuss the role of Medicare in their retirement. “The good news is that consumers want help, presenting a big opportunity for advisors to step up in terms of education and preparedness in helping clients plan for health care in retirement,” McGarry said. Nationwide Financial launched the Personal Health Care Assessment program to help advisors estimate their clientsí health care expenses in retirement. For more information, visit www.nationwide.com.

Linking Wellness Plans to Retirement Planning

Employers understand that an effective wellness plan may help reduce health care costs, but they also need to understand that wellness plans can help boost the success of their retirement plans, according to a new white paper from the Principal Financial Group. The white paper, Wellness = Retirement Savings, makes the connection between health and wealth when it comes to helping employees plan for retirement. Lee Dukes, president of Principal Wellness Company said, “Instead of only focusing on saving more for retirement, employers can put a much greater emphasis on helping employees stay healthy so they spend less on health care. Spending less means they will potentially have more to save. We propose employers make wellness part of their workplace culture – For employees, wellness plans can help emplreduce out-of-pocket medical expenses leaving more discretionary income for retirement savings.” The white paper provides also addresses best practices for structuring a wellness plan. For more information, visit www.principal.com 

Women Are Saving More in their in 401(k) Plans

For the first quarter of 2012, MassMutual’s Retirement Services finds women increased their deferral rates at twice the level of men (a four basis point average increase for women versus a two basis point average increase for men).

Women continue to favor age-based investments far more than risk-based options – in fact, more than 2.5 times as much – at 72% versus 28. Men remain more evenly divided on their preferences, with approximately 53% in age-based versus 46% in risk-based investments. Average account balances for women rose 7.93% for the quarter versus 7.27% for men. The gender gap is closing in terms of account balances. Average account balances for women now trail those of men by 38.8% compared to 40.5% in late 2010.

Recent industry reports have cited increased loan activity among retirement plan participants. However, since 2007,  MassMutual saw the lowest percentage of participants who initiated loans (1.26%) or other withdrawals (0.66%).

Also of note for the quarter, there was no significant difference in loan and withdrawal rates between men and women. Historically, women have taken greater percentages of loans and withdrawals. These declining rates for women also contributed to helping close the average account balance disparity between male and female participants. For more information, visit www.massmutual.com.

IN CALIFORNIA

High-Performance Networks in California

UnitedHealthcare is offering “SignatureValue” Allianceî in California, a new health benefits plan featuring high-performance care provider networks committed to delivering effective, evidence-based and cost-efficient care. Employers and plan participants can save on their health care costs through lower premiums while still having access to a wide range of traditional and deductible HMO plans.

The Alliance network includes six large physician groups in Southern California and parts of Northern California that include 90 hospitals and about 26,000 physicians and specialists. Participating Alliance physician groups include HealthCare Partners Medical Group, Heritage Provider Network, Monarch HealthCare Medical Group, PrimeCare Medical Group, SantÈ Community Physicians, and Scripps Health. For more information, visit www.uhc.com.

DISABILITY

Cancer, Pregnancy are Leading Causes of Disability

For more than a decade, cancer, pregnancy, and back disorders have been the top causes of disability claims for Unum. That trend continued in 2011, but new research reveals that most employees think injuries cause the most missed work, which reveals a misunderstanding of disability occurrences. According to the Council for Disability Awareness, 90% of all disability claims paid are for common illnesses and health conditions. And Unumís data also reflects that reality. In 2011, injuries prompted only 10% of Unumís long term disability claims and 11% of short term disability claims.
In 2011, Unumís leading causes of long term disability claims were the following:
• Cancer (15%)
• Back disorders (excluding injury) (14.6%)
• Injuries (10.4%)
• Behavioral health issues (10.1%)
• Circulatory system disorders (9.3%)
• Joint disorders (8.5%)
• The leading causes of short term disability were the following:
• Normal pregnancy (18.9%)
• Injuries (10.9%)
• Complications from pregnancy (8.8%)
• Digestive disorders (8%)
• Back disorders (7%)
• Cancer (6.6%)

The survey by Consumer Federation of America and Unum reveals that employees are far more likely to believe that injuries (66%), rather than illnesses (34%), cause the majority of disabilities that keep employees from work for at least three months.

Most employees also recognize that they do not understand group disability insurance. Only 13% said they know a lot about this insurance while 35% said they know only a little, and 52% said they know little or nothing at all. However, almost all employees recognize the importance of this insurance and desire its coverage.
For more information, visit www.unum.com

Americans Are Unprepared to Face a Disability

The majority of Americans lack basic knowledge about the likelihood of a disability and they are not prepared to handle this kind of life-changing event, according to a study by The State Farm Center for Women and Financial Services at The American College.

The risk of becoming disabled during one’s lifetime is higher than most people realize, particularly for women. The U.S. Social Security Administration estimates that one in four of todayís 20-year-olds will become disabled before they retire. Data from the Centers for Disease Control and Prevention (CDC) shows that women are increasingly more likely to experience a disabling condition during their working and senior years. The study found that 97% do not know that arthritis is the leading cause of disability and only 20% are aware of women’s increased risks. In fact, more than 30% of survey respondents believe accidents are the leading cause of disability.

The CDC confirms that females across all age groups report higher disability rates than males. As the leading cause of disability, arthritis affects women disproportionately, leaving them especially vulnerable to financial hardship stemming from a loss or reduction of income. Yet, the study found few are prepared.

A person with an annual income of $50,000, who works for 40 years, is projected to make more than $2 million in future earnings. A loss of these earnings can be devastating for an individual or family’s livelihood. The financial consequences are more alarming for women. Women (22%) are almost twice as likely as men (12%) to think their cash reserves would last less than a month. Unmarried women have an even bleaker outlook.

Fifty-nine percent of men and 63% of women are not concerned about becoming disabled and being unable to work for a year. Most say they would rely on cash reserves if they became disabled. However, 71% say their cash reserves would last less than a year.

Sixty-one percent of women and 46% of men have never researched disability insurance and less than 10% of people have purchased individual disability insurance plans. Almost half of employees  get disability policies through their employers, but most don’t feel knowledgeable about their policies. Four in ten Americans are aware that disability insurance payments only last for a specified period of time and just 27% of people know that employer-provided benefits are typically taxed.

Surprisingly, this lack of awareness and planning is even prevalent among those who work with financial professionals. Only Fewer than half (45%) have consulted with advisors about what might happen if they become disabled or about the potential consequences of their spouseís disability (42%). Furthermore, fewer women (37%) than men (52%) have had this discussion with an advisor. To get the study, visit WomensCenter.TheAmericanCollege.edu/DisabilityStudy.

EVENTS

Insurance Marketing Trade Show

The Professional Insurance Marketing Association (PIMA) is holding its Mid-Year Meeting and Trade Show July 19 to 22 in Santa Fe. PIMA’s conferences draw senior executives from the leading agencies, TPAs, brokerages, underwriters, and related product & distribution companies serving the affinity & direct marketing industry. Sessions will cover mobile adoption in insurance as well as online buying research and a regulatory & legislative update including implications of the
Supreme Court ruling on healthcare reform. For more information, visit http://www.pima-assn.org

HEALTHCARE

Powerful Hospitals Avert Cost Cutting by Insurers

Given the negotiating clout of must-have hospitals and physician groups, even dominant health plans are wary of disrupting the status quo by trying to constrain prices, perhaps because insurers can simply pass along higher costs to employers and their workers, according to a study by the Center for Studying Health System Change (HSC) published in the May edition of Health Affairs. The study is based on HSC’s 2010 site visits to 12 nationally representative metropolitan communities including one in Orange County, Calif.

Although dominant health plans might be able to restrain prices and achieve other contracting advantages, they must be sensitive to their employers’ preferences for stable provider networks. Therefore, insurers are willing to tolerate large price increases from providers as long as other health plans also pay higher rates, according to the article by HSC.

While hospital consolidation is often cited as the reason for growing provider clout, another important factor is employer reluctance to limit workers’ choice of providers by excluding them from plan networks. Without a credible threat of excluding a provider, insurers lack a critical bargaining chip. Other factors contributing to provider market power include reputation, provision of specialized services and geographic location.

Possible responses to growing provider market power include market-oriented and regulatory approaches. Market-oriented approaches are generally based on benefit designs that make consumers more aware of costs and give them direct incentives to select low-cost options…. Alternatively, in the face of rising premiums, employers that are not willing to adopt more restrictive benefit designs might support more direct regulation of provider rates, perhaps setting upper bounds on permissible rates negotiated between health plans and providers in relation to Medicare rates. For more information, visit http://www.hschange.org/CONTENT/1289/

How Expanding Consumer-Directed Health Plans Could Help Cut Health Care Spending

If consumer-directed health plans grow to account for half of all employer-sponsored insurance in the United States, health costs could drop by $57 billion annually – about 4% of all health care spending among the nonelderly, according to a new RAND Corporation study.

Consumer-directed health plans, which include high deductibles and personal health Accounts now account for about 13% of all employer-sponsored health coverage. Aggressive expansion of such plans is not without risks. Increasing adoption of high-deductible plans could also reduce the use of preventive and other high value health care services, according to findings published in the May edition of the Journal Health Affairs.

Amelia M. Haviland, a statistician at Carnegie Mellon University and RAND thinks that a 50% enrollment level is plausible over the coming decade due to continued pressures to cut costs and incentives in the federal Affordable Care Act.  “Given the limited information available to consumers about costs and quality, we need to carefully examine whether additional up-front patient costs will diminish the quality of health care,” she said.

The findings come from the most comprehensive study done on the effect and influence of consumer-directed and high-deductible health plans, which have grown rapidly over the past decade.

Researchers from RAND, Towers Watson and the University of Southern California examined the claims experience of 59 large employers across the United States from 2003 to 2007 to determine how consumer-directed health plans and other high-deductible plans influenced health care spending. Researchers estimate that, if consumer-directed health plans encompassed 25% of the policies selected by people with employer-based insurance, cost savings in the nonelderly population would be in the range of 1% to 2% of health care spending. At 75% penetration, savings would range from 5% to 9%. Consumer-directed health plans can clearly have a significant effect on costs, at least in the short term, Haviland said. “What we don’t yet know is whether the cutbacks in care they trigger could result in poorer health or health emergencies down the road,” she said.

For families enrolled in consumer-directed health plans, about two-thirds of the savings were the result of fewer encounters with health care providers. The remaining third was caused by lower spending per encounter, suggesting patients were making different choices about tests and treatments. Families in consumer-directed plans used fewer brand-name drugs, have fewer visits to specialists, and fewer hospital admissions compared to families in traditional plans.

“People in consumer-directed plans initiate health care less often and when they do, they get fewer or less costly health services than individuals in other health plans,” said co-author Neeraj Sood, an associate professor at USC and a RAND economist. “What we don’t yet know is whether the health care that was eliminated was unnecessary.”

The study found modest first-year reductions in use of highly recommended care, such as cancer screenings and routine testing to monitor patients with diabetes. This was despite the fact some preventive care was offered at no cost. “There needs to be better education of enrollees about plan features and how to navigate medical decision-making. The goal is to get patients to think critically about their care, not reduce high-value care that can help keep them healthy,” Haviland said.

The study authors are also concerned that increased use of consumer-directed plans raise increase premiums for those who remain in traditional health insurance plans since healthier people tend to drop traditional coverage in favor of less-costly, high-deductible plans. This could pose a challenge for the health plans offered through the new insurance exchanges created by health care reform. Roland McDevitt, a study co-author and director of health care research at Towers Watson said, “The adverse selection we found for traditional plans was not severe and there are mechanisms in the Affordable Care Act that should address this risk.” For more information, visit http://www.rand.org/newsletters.html

The Truth About the Individual market, Part Two

by Greg Scandlen
(Reprinted with permission from Health Alerts)

So, what is the problem with the individual market? Premiums are lower, administrative costs are similar, there is somewhat more competition, and most applicants who are rejected can find coverage in a risk pool, or would be able to if the pools had more financial support. Why does it continue to be the ugly step-child of the health care system? The answer is simple: it isnít subsidized.

Every other form of insurance coverage gets massive subsidies. Obviously Medicare and Medicaid, being government programs, get most of their funding from taxpayers. Government spending on Medicare was $555 billion in 2011 and $387 billion on Medicaid in 2009. Employer-sponsored health insurance is also subsidized ó to the tune of over $300 billion a year, according to the Congressional Research Service (CRS). This is because the value of coverage provided by the employer is excluded from employeesí income. Unlike wages, employees escape income taxes and payroll taxes on this benefit. Even the uninsured are subsidized. The Kaiser Family Foundation found that, while the uninsured paid $30 billion for their own care in 2008, they incurred another $56 billion in costs, three-quarters of which was compensated for by government.

Only people who buy their own coverage in the individual market get no tax break whatsoever. Actually, even that isnít quite true. In recent years the self-employed have been allowed to take a deduction of their health insurance premiums from their income, provided they make at least enough self-employment income to cover the expense. I havenít been able to track down the value of this tax break, but because they donít get to avoid the payroll tax the subsidy for the self-employed is still less generous than the complete exclusion from income of employer-sponsored coverage.

So who is left? Only those people who do not get coverage on the job, who are not self-employed, and who buy individual health insurance. These are the only people in America whose health insurance is not subsidized by the government.
Who are these unfortunates? They tend to be people of lower incomes. They may be unemployed or working only part time. They may be early retirees. If they are working, they are likely to be in low-paid jobs like retail clerks in small grocery stores, gardeners, busboys in restaurants, and the like.

Somehow the government has never seen fit to extend to these folks the kind of health insurance support the rest of us take for granted. Say what you will about ObamaCare, but for the first time in history it will provide some premium support to this segment of the population.

Unfortunately, ObamaCare leaps over many less drastic steps that might have solved the problem without the wrenching contortions imposed by this law. We might have, for example, improved the individual market without a mandate.
This might have been done simply by extending the same sort of subsidy to people who buy their own coverage as we give to those with employer-based coverage. Or, because the tax treatment of employer-based coverage is extremely regressive (higher-income people get more benefit than those with lower incomes), we might have reformed the whole thing to extend the same dollar amount to all who purchase health insurance. Or we might have provided a sliding scale subsidy to all who are covered, so that lower-income citizens get more help than those with higher incomes.

But let’s assume for a minute that all private health insurance is treated the same way for tax purposes, whatever that treatment might be. What would happen then? For most people nothing would change. Employers who find value in providing coverage would continue to do so. These might include companies in very competitive labor markets, or companies that are quite large and able to effectively pool their own risks, or companies with strong commitments to improving the health of their workforce through wellness programs and the like.

But, many other employers do not benefit from providing coverage. They may not have expertise on staff, or they might have high turnover, or be in relatively low-wage industries where cash wages are more attractive than insurance benefits. These companies could stop providing health insurance (many already have) and contribute to the cost of coverage for their employees instead. The employees would no longer be disadvantaged by the tax code because the same tax benefit would be available whether they secured their own coverage or got it from the employer. This would be particularly beneficial for two-income families. They would be able to merge the resources of two employers into a single program for the entire family. But the greatest benefit would accrue to people who struggle to maintain their individual coverage. They may be only marginally attached to the workforce or work in jobs where the employer has no interest or few resources to finance health care. They might also be retired or physically unable to work. In all of these cases there would be tax support available that wasnít there before.

How would the insurance industry respond?
This is where our scenario gets really interesting. Let’s assume that one-third of the current employer market switches to individual health insurance, in many cases with a contribution from the employer along with a tax credit from the government. That would mean 50 million new customers in the individual market. Most of these people would be well-subsidized and relatively healthy since they are at least able to work. Would that be an attractive market? You betcha it would!

Suddenly the individual market would not be confined to the handful of people who simply cannot qualify for employer-sponsored coverage – people with sketchy work and health histories and dubious finances. Suddenly there would be a very large number of potential customers who are gainfully employed and financially secure. The insurance industry would be eager to enroll them.

The industry would immediately take several steps to gain a share of this attractive market;
It would simplify the enrollment process to avoid alienating prospective customers.
It would design benefit programs to be more appealing to specific market segments.
It would start advertising directly to consumers, much as the auto insurance industry does.
New and innovative competitors would enter the market.
It would relax underwriting restrictions because the cost of underwriting would not be justified by the risk profile of the pool of applicants.

The last point needs to be explained a bit. As we’ve said, the current pool of applicants for coverage is very small and tends to be financially insecure and often of poor health. Carriers are cautious with this population because a handful of expensive people can have a large effect on the small enrollment base and the proportion of high risks is greater than in the general population. It is worth the expense of medical screening to protect the enrolled population from the cost of a few high-cost cases. Once the pool of applicants is more like the general population it is no longer worth the cost of screening 100% of the applicants to keep out the very small number of high risks. Medical screening also tends to alienate the good risks the company would like to attract.

There might still be a very simplified health statement required, but this might be confined to a checklist of ten (or so) questions looking for active cases of cancer or heart disease. These applicants would be referred to the high-risk pool. Every voluntary insurance market has some form of high-risk pool, usually referred to as a residual market.

This simple change in tax policy would lead to a much more competitive and innovative insurance market, and would make health insurance coverage far more affordable to people not benefitting from employer-sponsored care. It could lead to expanded insurance coverage as ObamaCare hopes to, but with far fewer regulations, mandates, and complexity, and much lower system-wide costs.

NEW PRODUCTS

Fund Lineup

The Hartford is introducing three new investment managers and 16 new investment options to its defined contribution retirement program offerings. Calamos Investments and Delaware Investments have been added to retirement plans for corporate and nonprofit sponsors. A third manager, TIAA-CREF, has been added for nonprofit sponsors, including schools, charities, government entities and others. In addition, 16 new investment options are available through The Hartford’s retirement investment platform, have been added. For more information, visit http://www.thehartford.com.

Dialysis Cost Containment for Self Insured Plans

American CareSource introduced its DiaSource solution for containment of dialysis costs. Dialysis Providers in the DiaSource a network have agreed to offer low, competitive rates. The patient’s dialysis costs are covered at 100%, and the employer has low predictable costs throughout the course of treatment. Employers also get member education resources, screening services, and individual disease management programs designed to maximize the quality care provided while helping to contain its costs. These value-added services are provided at no additional cost to DiaSource clients. For more information, visit www.diasourcesolution.com.

Group Term Life

Colonial’s group term life product offers an affordable way for employees to purchase this much-needed coverage. Insureds can use an accelerated death benefit to help offset the expenses associated with a terminal illness. A covered person diagnosed with a terminal illness can get up to 75% of the death benefit of the policy, up to a maximum of $150,000. Employees can access a 24-hour confidential service for help with personal or work-related challenges. This service includes face-to-face sessions with mental health professionals and attorneys, and well as referrals for state-specific legal information and services. Employees can get assistance with preparing wills at no additional cost. A covered person diagnosed with a terminal illness can get financial, legal and grief support and referrals for up to 12 months. There is additional coverage for accidental death or dismemberment. Employees, spouses and dependent children can add this optional coverage to the group term life policy. Coverage under most policies can be converted to whole life coverage if employees leave their jobs. For more information, visit www.ColonialLife.com.

Retirement Discussion Tool Kit

Transamerica is offering non-product-specific materials for advisors to use
in client meetings. The Retirement Redefined toolkit includes six conversation cards, a PowerPoint presentation, an easy-to-read brochure, and a workbook The Retirement Redefined program is designed to help financial professional to ease Baby Boomers’ retirement anxiety and expertly address the thousands of potential clients who have the same concerns. For more information, visit www.transamerica.com.

May 2 – by Leila Morris
Subscribe to Insurance Insider News
HEALTHCARE
• Mental Health Parity Won’t Boost Employers’ Costs
• Many Americans Have Pre-Existing Conditions
• CMS Proposes Medicare Payment Rules
DISABILITY INSURANCE
• Singles Lack a Disability Safety Net
• Onsite Consultants Can Improve Disability Management
LONG TERM CARE
• Linked Life & LTC Attracts Younger Buyers
CAREER UPDATE
• Good Insurance Jobs Go Unfilled
NEW PRODUCTS
• Disability Coaching
• Variable Life
• Variable Annuity
• Employer-Sponsored Retirement Plans
• Customer Service Training Course
FINANCIAL PLANNING
• Women Are Less Prepared for Retirement

HEALTHCARE

Mental Health Parity Law Not Expected to Boost Employers’ Costs

The Mental Health Parity and Addiction Equity Act (MHPAEA) is not likely to have a big effect on the growth rate of employer healthcare expenditures, according to two studies from researchers from Thomson Reuters working with the Substance Abuse and Mental Health Services Administration. “Employers need not be alarmed by the new coverage mandates of the MHPAEA…Given the relatively low spending on, and low intensity of use of, mental health and substance abuse services, that the additional cost incurred by employers because of the mandate is likely to be negligible,” according to Tami L. Mark, Ph.D., the paper’s lead author and senior director, Thomson Reuters.

The research shows that substance abuse spending has held steady as a low portion of all costs, comprising just 0.4% of all health spending in 2009.  Also, mental health and substance abuse spending accounted for only 5.2% of all health expenditures from 2001 through 2009 (2.2% if psychiatric drug spending is excluded). That spending contributed just 0.3% to the growth in total health expenditures with prescription drugs included, and 0.1% when prescriptions are not included. To access a copy of Mental Health Spending by Private Insurance: Implications for the Mental Health Parity and Addiction Equity Act, visit http://www.sciencedirect.com/science/article/pii/S0376871612000658.

Many Americans Have Pre-Existing Conditions

Hypertension was the most commonly reported medical condition among adults that could result in a health insurer denying coverage, requiring higher-than-average premiums, or restricting coverage, according to a report by the Government Accountability Office (GAO).

Compared to others, adults with pre-existing conditions spend thousands of dollars more annually on health care, but pre-existing conditions are common across all family income levels. GAO’s analysis found that about 33.2 million adults age 19 to 64 years old or about 18%, reported hypertension in 2009. People with hypertension reported $650 in average annual expenditures related to treating the condition, but maximum reported expenditures were $61,540. Mental health disorders and diabetes were the second and third most commonly reported conditions among adults. Cancer was the condition with the highest average annual treatment expenditures – about $9,000.

Depending on the list of conditions used to define pre-existing conditions in each of the five estimates, GAO found that 36 million to 122 million adults reported medical conditions that could result in a health insurer restricting coverage. This is 20% to 66% of the adult population, with a midpoint estimate of about 32%. The differences among the estimates can be attributed to the number and type of conditions included in the different lists of pre-existing conditions. For more information, visit http://www.gao.gov/products/GAO-12-439

CMS Proposes Medicare Payment Rules

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment policies and rates. The rule covers inpatient stays to general acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) as well as long-term care hospitals paid under the long term care hospitals Prospective Payment System (PPS).

CMS expects payment rates to general acute care hospitals to increase 2.3% in fiscal year 2013. Under the proposed rule, long term care hospital payments are expected to increase 1.9% in fiscal year 2013. CMS is proposing an annual update to long-term care hospitals payment rates of 2.1%. The 2.1% update will be reduced by about 1.3% to 0.8% for the one-time budget neutrality adjustment for discharges on or after December 29, 2012.

The proposed rule would strengthen the Hospital Value-Based Purchasing Program to further Medicare’s transformation from a system that rewards volume to one that rewards efficient, quality care. This program, which was required by the Affordable Care Act, will adjust hospital payments beginning in fiscal year 2013 and annually thereafter based on how well they perform or improve their performance on a set of quality measures.

CMS is proposing to add the Medicare spending per beneficiary measure to the Hospital value based purchasing program. It would affect payments beginning in fiscal year 2015. This measure would include all Part A and Part B payments from three days before an inpatient hospital admission to 30 days after discharge with certain exclusions (after removing differences attributable to geographic payment adjustments and other payment factors). The proposed measure would be risk-adjusted for the beneficiary’s age and severity of illness.

The Affordable Care Act requires CMS to implement a Hospital Readmissions Reduction Program. The program will reduce payments, beginning in fiscal year 2013,  to certain hospitals that have excess readmissions for heart attack, heart failure, and pneumonia (for discharges on or after October 1, 2012). The proposed rule covers payment adjustment factors to account for excess readmissions.

The proposed rule includes measures used for long term care hospitals for fiscal year 2015 and fiscal year 2016 payment determinations. It establishes programs and quality measure reporting for psychiatric hospitals that are paid under the Inpatient Psychiatric Facility Prospective Payment System as well as PPS-exempt cancer hospitals. Additional reporting requirements are proposed for the ambulatory surgical center quality reporting program.

Under the Medicare, Medicaid, and SCHIP Extension Act of 2007, Congress imposed a three-year moratorium, which prevented CMS from implementing certain payment policies for long term care hospitals. The law imposed a moratorium on establishing new long term care hospitals and satellite facilities and on increasing the number of patient beds in existing long term care hospitals, unless an exception applied. The moratorium was extended for two years in the Affordable Care Act of 2010. The moratorium will, therefore, expire at various times in 2012.

CMS will accept comments on the proposed rule until June 25 and will respond to all comments in a final rule to be issued by August. The proposed rule can be downloaded from the Federal Register at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-09985.pdf

DISABILITY INSURANCE

Singles Lack a Disability Safety Net

A majority of single Americans lack a basic safety net even though they would be hard hit financially if they faced a disabling health issue, according to research from The Hartford. Eighty seven percent of singles would need to make lifestyle changes to meet expenses if they lost income for three to six months, yet only 44% have disability insurance.  Singles who don’t have disability insurance said they would do the following if they could not work for six weeks or more due to a disability:

• 36% would live off of their savings.
• 23% would withdraw from the 401(k).
• 8% would use credit, cards, or bank loans.
• 5% would ask for a loan from a friend or family member.
• 4% would move back in with family, parents, brother or sister.

Only 28% of Americans completely understand disability insurance. Also, 45% overestimate the cost of short-term disability insurance by hundreds of dollars and another 45% say  they had no idea how much the coverage costs. For more information, visit http://www.thehartford.com.

Onsite Consultants Improve Disability Management

Using an on-site consultant for absence and disability management can improve health and productivity, according to a white paper by The Standard. An on-site consultant can maximize the following practices:

1) Early disability reporting — This practice involves reporting an employee’s absence or disability claim as soon as possible. Early disability reporting can work together with a transitional return-to-work program to help shorten the duration of an absence or disability.

2) Disability duration guidelines — These guidelines help predict the duration of a disability and serve as a standardized method of assessing the effectiveness of a return-to-work program.

For more information, visit www.standard.com.

LONG TERM CARE

Linked Life & LTC Attracts Young Buyers

Benefits that combine life insurance and long-term care coverage are gaining favor with people in their 40s and 50s, according a study by the American Association for Long-Term Care Insurance. The policies can be used fund qualifying long-term care at home or in a skilled care facility. Some linked (hybrid) products allow unused benefits to pass to named beneficiaries income tax-free.

In 2011, 53% of buyers were under 65 icompared to only 48% in 2010. Some 42.5% of male and 38.5% of female buyers were 55 to 64 Nearly one in 10 buyers were 45 to 54.

“At a time when long-term care is increasingly top of mind, these life insurance-based solutions avoid the use it or lose it risk associated with traditional long term care insurance…In most cases, people make a single payment, effectively removing the risk of future premium increases,” says Chris Coudret, CLU, ChFC, vice president. Sales for the participating linked benefit insurers increased 14% in 2011 and the premium increased almost 20%. For more information, call 818-597-3227 or visit www.aaltci.org.

CAREER UPDATE

Good Insurance Jobs Go Unfilled

High-paying career-track jobs in the insurance industry are going unfilled in spite of record unemployment. Agency owners and industry executives are struggling to recruit and retain top-notch employees to fill risk management, insurance, employee benefits, actuarial, underwriting, and other positions – particularly highly prized Millennials under age 30.

Jim Hackbarth, CEO of Assurex Global said, “Whether you are a recent college grad embarking on your first job or an established employee looking to make a career change, the insurance industry presents a wealth of opportunities.” Forty-four percent of insurance industry professionals surveyed in 2011 anticipated adding staff in 2012. Based on income and employment outlook, actuarial science consistently ranks among the top-10 jobs for college grads. Underwriting also is ranked as a top-25 job, based on income, environment, and security.

Despite a phenomenal 100% placement rate for risk management and insurance majors, college graduates simply do not gravitate toward insurance careers. Thanks to negative perceptions about the profession, a lack of awareness about rewarding careers, and a limited pool of trained talent, graduating students fill no more than 15% of the industry’s hiring needs. The tendency to overlook insurance careers by the Millennial Generation and Gen-Xers between age 30 and 51, creates an enormous challenge for an industry that anticipates a 50% workforce turnover in the next 15 years, said Hackbarth.

To attract and retain quality employees, insurance brokers, agency owners, and other employers need to offer the following 20-somethings:

* A clear career ladder
* Mentorship
* Short-term work goals
* Long-term professional development
* Regular performance evaluations
* Rewards for achieving job-related goals and services including education assistance
* Financial planning to help handle life’s challenges.

For more information, visit www.assurexglobal.com.

Insurance Executives Network to Find Business Partners

Seventy percent of executives look to their peers to find their next strategic alliance opportunity, according to a survey by Inter-Company Marketing Group (ICMG). Likewise, industry peers are the most-common sources for conducting due diligence about potential business partners. Nearly eight of 10 respondents look to peers when conducting due diligence; nearly seven of 10 look to the potential partner’s marketing or other materials; and six of 10 look at financial statements and annual reports.

Exporting products and services is the most common alliance strategy, with 32% of respondents saying that it has been their approach. The next most-common strategy is to import products to market through existing distribution channels. For more information, visit www.icmg.org/survey.asp.

NEW PRODUCTS

Disability Coaching

Cigna’s long-term disability customers now have access to programs from Achilles International including individual coaching, personal training, and an opportunity to participate in fitness activities with other members. Initially, the program will target customers with mental disability, post-traumatic stress disorder, anxiety, depression, physical injury, loss of mobility, cancer, diabetes, and stroke. For more information, visit http://achillesinternational.org/programs/kids/overview.

Variable Life & Annuity Enhancements

Nationwide Financial is offering several enhancements to its investment lineup for variable annuity and variable life insurance products. Fifteen new fund options provide more options for advisors to select an asset class for clients.  Nationwide will begin offering the following options from Dimensional Fund Advisors for its variable life products: VA Global Bond Portfolio, VA US Large Value Portfolio, VA US Targeted Value Portfolio, VA International Value Portfolio, VA International Small Portfolio and VA Short-Term Fixed Portfolio. For more information, visit http://www.nationwide.com.

Variable Annuity

Jackson National launched MarketGuard Stretch. With the guaranteed minimum withdrawal benefit (GMWB), beneficiaries can spread distribution payments over their lifetime, keeping more money in a tax-deferred account for continued growth potential. Policyholders can provide for potentially young and inexperienced beneficiaries by avoiding a lump sum death benefit in favor of longer-term distributions. The beneficiary’s required minimum distributions are determined annually based on the account value and life expectancy. For more information, call 800-711-JNLD (5653) or visit www.jackson.com.

Employer-Sponsored Retirement Plans

Lincoln Financial enhanced its LifeSpan customized model asset allocation program for employer-sponsored retirement plans. Plan sponsors have the option to engage with Ibbotson Associates. The registered investment advisor and wholly owned subsidiary of Morningsta provides discretionarily managed custom model portfolios with ERISA 3(38) coverage.

Under ERISA section 3(38) defined contribution plan sponsors can hire a registered investment manager and transfer investment-related liability to the investment manager for the oversight of plan investments. For more information, visit www.LincolnFinancial.com.

Customer Service Training Course

LOMA has launched Customer Service for Insurance Professionals (ACS 101). The course provides a comprehensive view of the customer service role, as well as insurance-specific information and skills-based training. The interactive environment allows learners to practice customer service skills. For more information, visit loma.org.

FINANCIAL PLANNING

Women Are Less Prepared for Retirement

Women are significantly less prepared for retirement than men, according to a study by ING U.S.  Among those with savings, men have an average of $149,000 in or outside of an employer-sponsored retirement plan compared to $108,000 for women. Women with children at home have an average of $88,000.

Forty-two percent of women contributed just 1% to 5% of their salary into their plans compared to 34% of men. Twenty-five percent of have a formal investment plan to reach their retirement goals compared to 33% of men. In addition, 56% of women say they are not financially prepared for retirement compared to only 42% of men.

While the income gap between men and women has narrowed in recent years, mothers tend to spend more time out of the workforce due to caregiver responsibilities. Sixty percent of mothers say they are not prepared for retirement and 46% don’t know how to achieve their retirement goals. Fifty-three percent of mothers have less than $25,000 saved in their employer-sponsored retirement plan.

Sixty-five percent of mothers are receiving their employer’s full company match compared to 76% of fathers. For financial guidance, 69% of single women rely on their own research or family and friends compared to 63% of married women. Twenty-one percent of single women work with a financial professional compared to 31% of married, divorced, or widowed women.

Gen Y (age 25-34) women are most likely to have barriers to saving (86%) compared to women 35 or older (74%). Fifty-six percent of Gen Y women have outstanding student loans. For more information, visit http://ing.us/rri/ing-studies/what-about-women.

IN CALIFORNIA
• California Settles with MetLife
• State Legislation Goes After Shady Hospital Billing Practices
ANNUITIES & LIFE INSURANCE
• Fixed Annuity Webinar
• LIDMA Now Accepting 2012 Seal of Approval Applications
NEW PRODUCTS
• Supplemental Income Protection Plan
• Prepaid Healthcare Spending Cards
• Travel Accident Policy
EMPLOYEE BENEFITS
• Employers to Hang On to Benefit Programs
• Best Practices for Health and Fitness Month
• Get Ready for Disability Insurance Awareness Month
HEALTHCARE
• Three in Five Americans Misuse Prescription Drugs
• The Truth about the Individual Market
• United Reports Strong Enrollment Growth
• Health Care Reform May Cut Workers’ Comp Costs

IN CALIFORNIA

California Settles with MetLife

The California Department of Insurance negotiated a multi-million dollar settlement with MetLife Inc. The insurance departments of Illinois, Florida, New Hampshire, North Dakota, and Pennsylvania joined in the negotiation.  MetLife has agreed to strict business reforms to ensure it pays out life insurance benefits quickly.

The company will also pay $40 million to state insurance departments. California’s share of the settlement has not yet been determined, but is expected to be approximately $3.5 million.

The agreement was developed along with an agreement by California State Controller John Chiang. That agreement is expected to deliver millions of dollars in death benefits to state controllers’ offices, who will then seek beneficiaries to pay them their benefits.

The Dept. of Insurance charges that, for many years, MetLife selectively used the Social Security Administration’s Death Master File database to cut off payments to annuity holders, but did not use that database to identify deceased life insurance policyholders and pay their beneficiaries. If MetLife learns that a policyholder died, it must conduct a thorough search for beneficiaries using contact information in its records and online search and locator tools. If MetLife does not find a beneficiary within a year of learning of a death, it must transfer the benefit to the appropriate state controller as unclaimed property.

State Legislation Goes After Shady Hospital Billing Practices

The website, www.Californiawatch.org reports that the emergency room practices of a major California hospital chain have prompted new legislation to reduce what critics describe as a pattern of capturing insured patients in order to boost bills.

Sen. Ed Hernandez, D-West Covina, chairman of the state Senate Health Committee, is carrying the bill limiting how much hospitals are paid after they admit a certain rate of out-of-network, privately insured patients.

Because state law is so vague, hospitals can charge insurers top dollar for treating patients from outside their medical networks.  Hernandez, who was co-chairman of a Feb. 24 legislative hearing in Los Angeles, said the proposed bill comes after his office heard about a growing hospital practice of avoiding contracts with health plans, filtering patients with commercial insurance through their ER, and billing higher out-of-network charges to maximize profits.

Hernandez introduced his bill after a yearlong California Watch investigation into aggressive billing by Prime Healthcare Services, a 16-hospital chain based in Ontario.  Prime spokesman Edward Barrera said, “This poorly written bill unduly gives more power to HMOs and insurance companies…and makes it even more difficult for hospitals across the state to stay solvent.

The bill would only affect hospitals in which, half or more of privately insured patients who are admitted through the emergency room are outside of their care network. Once a hospital reaches that point, it would be paid Medicare rates or a good faith and reasonable estimate of costs.

The move comes as Kaiser and Heritage Provider Network, are suing Prime in Los Angeles County Superior Court. Kaiser accuses the chain of attempting to increase profits by capturing their patients who come into Prime emergency rooms. Heritage says the chain misdiagnoses patients to justify keeping them in Prime hospitals.  Prime has denied those claims and filed the first lawsuits in the disputes with the insurers, saying wrongfully withheld payments for patient care.

The lawsuits are ongoing.

During the February hearing, Assemblyman Bill Monning, D-Monterey, and Hernandez heard testimony from a Kaiser emergency room doctor who said hospitals bought by Prime stopped communicating with Kaiser about patients.  Sandra Taylor-Davey, granddaughter of a Medicare patient, testified about the difficulties her family faced getting her grandmother moved out of West Anaheim Medical Center, which is owned by Prime.  Hernandez’s bill is up for a hearing and vote Wednesday.  The California Hospital Association opposes the bill.

In an April 9 letter to Hernandez, the hospital association said the bill conflicts with law, which lays out what emergency room doctors and managed care plans, are required to do when dealing with out-of-network patients.  Kaiser and Heritage have accused Prime of subverting the law by routinely failing to notify them when a covered patient lands in a chain hospital.

However, prime general counsel and vice president Michael Sarrao has said its doctors make autonomous decisions about how to handle emergency care.  The hospital association said that, when disagreements over the process can’t be resolved, the appropriate forum to resolve disputes remains the courts.  Kaiser and the California Association of Health Plans have not taken a position on the bill.

ANNUITIES & LIFE INSURANCE

Fixed Annuity Webinar

The National Assn. for Fixed Annuities (NAFA) is holding a Webinar Thursday, April 26 at 10:30 AM Central on how to ramp up annuity sales.  For more information, visit www.nafa.com.

LIDMA Now Accepting 2012 Seal of Approval Applications

The Life Insurance Direct Marketing Association (LIDMA) is accepting applications for companies that want a LIDMA Seal of Approval to recognize their implementation of process improvement technologies and procedures.

The LIDMA Seals of Approval can be awarded to member companies that have implemented an applicable technology or process such as Enhanced Part 2

Collection, eSignature, and ePolicy Delivery. LIDMA staff will conduct an inspection for each applicant to ensure the technology or process is active and not just in development or testing mode. LIDMA Seals of Approvals are valid for two years. For more information, visit http://www.lidma.org.

NEW PRODUCTS

Supplemental Income Protection Plan

Petersen International Underwriters introduced a specialty disability insurance plan with a 10-year benefit period. Before this new plan, the longest monthly benefit period that the market supported was seven years.  The plan has uses for personal income protection and business disability uses with high issue limits. While limited to more preferred risks, this extended benefit period is also designed for those who want or need a longer period of payable benefits. For more information visit www.piu.org or call 800-345-8816 or email info@piu.org.

Prepaid Healthcare Spending Cards

United Preference introduced its “Tailored Spend” prepaid card products. Health plans and employers use customizable administrative portals to track when and how funds are being spent. It helps them understand how incentive dollars influence participation in preventative health programs and healthy behaviors. For more information, visit: www.unitedpreference.com.

 Travel Accident Policy

California employers can now provide insurance protection if an employee suffers a covered injury while traveling to work by carpool or vanpool, mass transit, or alternative-fuel private-passenger vehicle. All U.S. employees of California-based companies are eligible for this first-of-its kind coverage. Employers can add the optional coverage to Chubb’s global business travel accident insurance policy. For more information, visit http://www.chubb.com/businesses/accident/chubb4688.html.

EMPLOYEE BENEFITS

Employers to Hang on to Benefit Programs

Given the uncertainty surrounding health care reform, employers do not appear eager to make big changes to their benefit offerings, according to a survey by Zywave.

Beginning in 2014, the Affordable Care Act requires employers with more than 50 employees to offer minimal essential health coverage to employees or be subject to a penalty. More than three-fourths of employers plan to continue offering health benefit coverage once this new requirement takes effect. However, a majority is also concerned about being able to offer affordable health coverage to full-time employees. Fifty-one percent say they will definitely continue to offer health benefit coverage, 29% are likely to continue coverage, 3% are likely to discontinue coverage, 1% will definitely discontinue or have already discontinued coverage, and 19% are not sure what they will do when the requirement goes into effect in 2014.

While most employers are committed to continuing health benefit coverage for their employees, 76% have already seen an increase in their organizations health benefit costs or expect to see an increase as a result of health care reform provisions. Thirty-three percent of employers plan to pass these increases on to employees. Eighty-eight percent expect their employee benefit adviser to educate them on health care reform and its implications.

Health care reform requires group health plans that provide dependent coverage of children to make that coverage available to children up to age 26. In response to this requirement, 10% of employers increased the employee share of premiums or benefit costs for all coverage; 9% increased the employee proportion of dependent coverage cost; and 2% eliminated dependent coverage.  Fifty-seven percent of employers are concerned about their ability to offer affordable health coverage to full-time employees.  The health care reform provisions that employers are most concerned about implementing and administering include: new reporting, disclosure and notification requirements (57%), additional W-2 reporting requirements (49%), and the requirement to automatically enroll new employees in a health plan (40%).  To learn more, visit www.zywave.com.

Best Practices for Health and Fitness Month

May is Global Employee Health and Fitness Month. So Healthyroads is offering employers nine best practice tips to encourage organizations to build a culture of wellness at their worksites:

1. Understand Your Goals – Study claims data, absenteeism, and other issues to understand the causes of increasing health costs. Then develop a wellness program that addresses those issues.  For example, does the employer have a lot of smokers?  Smoking-related health issues may be increasing health care costs. Are work-related back injuries increasing medical utilization?

2. Know what motivates employees – Set achievable goals and create incentives to motivate healthy changes.

3. Get senior management to support health improvement initiatives – Encourage company leaders to set an example for healthier lifestyles. A manager who is ready to quit smoking, lose weight, or get fit can encourage employees. Conversely, if senior managers smoke, employees will have a hard time believing the company’s commitment to go smoke-free.

4. Build a champions network – This network should include representatives of the entire company who support company-wide health improvement initiatives.

5. Provide consistent communications throughout the year – It may take sending many messages to get through to people. Use various ways of communicating with posters, emails, meetings, contests, bulletin boards, word of mouth, and onsite health activities. Different approaches work for different people.

6. Offer onsite health activities throughout the year – This will generate awareness and enthusiasm, especially when you sponsor competitions.

7. Promote a culture of wellness – Encourage healthy alternatives at luncheons; offer healthy foods in vending machines; organize lunchtime run/walk clubs; invited community health and wellness professionals to provide lunch and learn seminars; and sponsor things like health fairs, onsite massage therapy, and gym membership discounts.

9. Initiate and integrate – Wellness programs should be included in the employee benefit plans (medical, prescription drug, disease management, EAP, etc.) to provide a seamless program design that streamlines communication and education. For more information, visit Healthyroads.com.

Get Ready for Disability Insurance Awareness Month

The LIFE Foundation is coordinating Disability Insurance Awareness Month (DIAM) to help educate consumers about the critical role that disability insurance plays in a sound financial plan. The campaign focuses on a simple message: Protect Your Paycheck to help the public understand the benefit disability insurance provides. LIFE has developed new educational resources and a DIAM e-Kit, which offers insurance agents and benefit specialists the resources they need to implement their own marketing and communications initiatives. The kit can be accessed at www.lifehappens.org/diam.

HEALTHCARE

Three in Five Americans Misuse Prescription Drugs

Women and men of all ages, income levels, and health plan coverage misuse pain and other prescription medications, potentially putting their health at risk, according to a study of nearly 76,000 laboratory tests by Quest Diagnostics. The majority of Americans tested misused their prescription drugs, including potentially addictive pain medications. Sixty-three of patients tested through Quest Diagnostics were inconsistent with clinician orders. Many Americans take prescription medications in ways that put their health at risk – from missing doses to combining medications with other drugs without a clinician’s oversight.

The study found high rates of inconsistency with clinician orders among all specific drug classes tested, including opioid pain medications, such as oxycodone (including OxyContin(44%), central nervous system depressants like alprazolam (including Xanax(50%), and the stimulant amphetamine (such as Adderrall(48%).

“Keith Heinzerling, MD said, “These results are sobering and suggest that changes in prescribing medications and educating patients in appropriate prescription drug use are urgently needed,” said Dr. Heinzerling. The entire report is now available at www.QuestDiagnostics.com/HealthTrends

The Truth about the Individual Market

by Greg Scandlen

Reprinted with permission from http://healthblog.ncpa.org

The individual market for health insurance has been long disparaged for being too expensive and too restrictive. The criticisms about health insurance are usually based on what the individual market is doing. The promise by supporters of the Affordable Care Act that people will no longer be turned down for coverage is an example. This is already illegal in all but the individual market. Even there, denials are a miniscule issue. According to a recent report by Milliman, based on new reporting by carriers required by the National Association of Insurance Commissioners (NAIC), there are only 10,300,000 people covered by individual health insurance – 3% of the population of the United States. And denials would happen only at the time of application for coverage, not after someone is already covered.

The trade group America’s Health Insurance Plans (AHIP) reports that 87% of all applicants for individual coverage are accepted. Out of 1,763,000 applicants who were medically underwritten in 2008, AHIP reports that 223,000 were denied coverage. This is less than one tenth of 1% of the country’s population. I beg your pardon, I never promised you a rose garden. The other criticism of the individual market is that it is too expensive.

Milliman’s analysis of the NAIC reports finds that is simply not true. In fact, the premium per member per month for individual (non-group) coverage is $211.67 while the small group premium is $333.25 and large group is $333.74. Milliman also finds that the individual and small group markets have similar administrative costs on a per member/per month basis ($40.49 and $43.82, respectively), but are higher than large group ($31.29), mostly due to distribution costs (marketing.) But because premiums are lower for individual coverage, similar expenses result in higher percentage of premiums. Thus, the individual market has a lower loss ratio (80.9%) than small group (83.7%) or large group (89.3%).

What about market domination? Milliman finds there are three states where a single carrier has 90% or more of market share in the large group market, two states for the small group market, and not a single state in the individual market. The number of states where a single carrier has 60% or more is 21 for large group, 17 for small group, and 15 for individual.

So what’s going on here? The individual market is somewhat more competitive, has similar administrative costs, and considerably lower premiums than the small group and large group markets. Yet it is widely disparaged. Why? The biggest reason is denials of coverage for new applicants. Only seven states require companies in the individual market to accept all applicants (guaranteed issue), but 33 of the remaining states have a high-risk pool that will enroll people who are denied, and for the rest, Miliman reports, “The state may designate an insurer of last resort, have a specified product that is issued on a guaranteed basis, or require that each market participant insure a quota of high-risk people.

Now, it may be that these risk pools are underfunded and too restrictive, but the insurers can hardly be blamed for that. That is the responsibility of state legislatures. And it hardly seems rational to turn the entire health care system on its head to solve a problem that affects much fewer that one-tenth of 1% of the population. The other problem, of course, is that benefits in the individual market are less generous than in the group market. These plans very often don’t cover prescription drugs or maternity, or require a separate rider for these benefits. But if the market wanted to buy coverage for these benefits, it is certain the insurers would be happy to sell them. But, when people buy their own coverage they tend to be more cautious in getting value for their money, and don’t load up on things they don’t think they will need.

The biggest problem in the individual market is that it isn’t subsidized.  The health insurance marketplace continues its march toward change as California’s Department of Insurance proposes new controversial rules on small business self-insurance and officials mull increasing premiums on those with unhealthy lifestyles.

United Reports Strong Enrollment Growth

UnitedHealth Group’s first quarter results show strong enrollment and revenue growth in each of its benefit businesses as well as well as diversified revenue growth at Optum. Over the past year, fee-based offerings grew to serve 955,000 more consumers while risk-based commercial products decreased by 110,000 people.

Nearly 5 million consumers participated in UnitedHealthcare’s consumer-directed health care products by the end of the first quarter of 2012.

In Medicare Advantage, UnitedHealthcare served 330,000 more people in the past year – a 15% increase. Growth in active Medicare Supplement products continued, with the number of people served increasing by 200,000 or 7% in the past year, including 105,000 people in the first quarter of 2012.

However, as of March 31, 4.2 million members participated in the company’s standalone Part D prescription drug plans. Participation decreased by 615,000 people in the first quarter. Pricing benchmarks for the government-subsidized low income Part D market came in below the Company’s bids in a number of regions.

The Company expanded its Medicaid services to 200,000 more beneficiaries, including 65,000 people in the first quarter. Recent awards in Hawaii, Washington and Ohio are expected to add to the Company’s membership over the next year.

In the first quarter of 2012, OptumHealth’s revenues increased 29% year-over-year. The revenue increase was driven by 2011 market expansions in clinical care and services for payers and the military as well as strong growth in care services and carve-out specialty risk offerings. For more information, visit www.unitedhealthgroup.com

Health Care Reform May Cut Workers’ Comp Costs

A new study from the RAND Corporation reveals that health reform has the potential to reduce Worker’s Comp. costs. The study looked at data from Massachusetts.  In 2006, Massachusetts implemented a health care reform package with several provisions similar to those in the Patient Protection and Affordable Care Act. Using data from Massachusetts, the study found that Workers’ compensation billing frequency for emergency room visits and inpatient hospitalizations fell by 5% to 10% as a result of reform while billed charges and treatment volume were not measurably affected.

Paul Heaton, author of the study and an economist at RAND said that when employees have other health insurance, that insurance pays for treatment that would otherwise be billed to workers’ compensation.  The study, “The Impact of Health Care Reform on Workers’ Compensation Medical Care: Evidence from Massachusetts,” can be found here http://www.rand.org/pubs/technical_reports/TR1216.html.

April 18 – by Leila Morris
Subscribe to Insurance Insider News
IN CALIFORNIA
• UnitedHealthcare Agrees to Cover Behavioral Therapy for Autism
• Life Agent Is Charged With Grand Theft
NEW PRODUCTS
• Free Educational Webinars on Health Insurance
• Fixed Immediate Annuity
• Prescription Adherence Tool
• National Vision Product
• Variable Annuity
• Defined Benefit Termination Program and Guide
• Bilingual Mobile Website
• Book Bashes ObamaCare
PRESCRIPTION DRUGS
• Healthcare Costs Soar When Patients Don’t Take Their Meds
HEALTHCARE
• Murky Healthcare Pricing Affects High Deductible Plans
• New Cancer Care Payment Model Recommended
FINANCIAL PLANNING
• Contrary to Predictions, Boomers Are Retiring
DISABLITY INSURANCE
• On-Site Consultants Enhance Disability Reporting

IN CALIFORNIA

UnitedHealthcare Agrees to Cover Behavioral Therapy for Autism 

Insurance Commissioner Dave Jones reached an agreement with UnitedHealthcare to cover behavioral therapy for autism as a medical benefit. This new agreement follows three settlements reached earlier this year with Blue Shield, Health Net and Cigna to provide behavioral health treatments, including Applied Behavior Analysis, a well-recognized and effective treatment for autism. Anthem Blue Cross of California has been providing the coverage, pursuant to the direction of the Department of Insurance, since November 2009.

UnitedHealthcare also agreed to do the following:

• Maintain an adequate provider network.

• Provide services for the length of time and at the number of hours per week specified by the insured’s provider.

• Create a dedicated customer service unit with staff who are trained to handle inquiries about applied behavioral analysis.

• Provide information about policy benefits for medically necessary behavioral health treatment, screening or diagnosis.

• Verify coverage or eligibility and provide prior authorization, if required.

Before the settlement, UnitedHealthcare rejected claims for applied behavioral analysis, saying that the treatment was experimental and investigational. This series of agreements ensures that the company complies with the state’s Mental Health Parity Act (MHP), which requires coverage for medically necessary behavioral therapies. Reinforcing the requirement of the MHP, the Legislature last year passed SB 946 (Steinberg).

Life Agent Is Charged with Grand Theft

Lori Charles, 41, of Culver City was sentenced on one felony count for violating Penal Code Section 487 (a), Grand Theft. From April 2008 through April 2009, Charles created fictional names and submitted 377 fraudulent insurance applications to a life insurer. The insurer issued Charles over $62,000 in advanced commissions before discovering that something was amiss. The insurer filed a complaint with CDI after noting that Charles submitted an unusually large number of policies in which the policyholders had not submitted premium payments.

Charles entered a plea of no contest in Los Angeles County Superior Court. She was sentenced to 90-days of community service and three years of formal probation. She was also ordered to repay restitution in the amount of $62,652. Charles’ license to sell insurance expired on June 30, 2011.

NEW PRODUCTS

Free Educational Webinars on Health Insurance 

Flexible Benefit Service Corp. launched an educational program on health insurance and benefits administration as well as reimbursement solutions. It is geared toward health insurance producers, human resource professionals, and business professionals. The series of free webinars and seminars will be offered through the “FlexUNIVERSITY” platform, with some courses offering Continuing Education Units (CEUs) from the Illinois Department of Insurance or credits from the Human Resources Certification Institute. For more information, visit www.flexiblebenefit.com or call 866-472-0882.

Fixed Immediate Annuity
Nationwide Financial introduced an enhanced version of its
Income Promise Select fixed immediate annuity product.
Features include the following:

• Lump sum cash refunds for beneficiaries of clients who do not outlive their principal investment.

• Liquidity options that allow clients to make lump sum withdrawals in the event of emergency or the need for extra cash.

• Highly competitive payout rates.

• Cost of living adjustment (COLA) option, which now offers up to 5%.

• A new, easy-to-use quote and illustration tool to help advisors demonstrate the benefits and features of Income Promise Select.
For more information, visit www.nationwide.com.

Prescription Adherence Tool

Express Scripts launched ScreenRx, a solution in the fight against the nation’s costliest health condition: medication non-adherence. The tool identifies patients at highest risk for not following their doctors’ orders. Once identified, patients receive personalized interventions to help them stay on their therapy. ScreenRx considers more than 400 known factors about the patient, the physician, the disease and the prescribed therapy to identify who is most likely to stop taking their medication. The models are up to 98% accurate in predicting non-adherence one year in advance – nearly nine times more accurate than what patients self-report.

National Vision Product

MetLife introduced a vision PPO to employers in all 50 States with 10 or more eligible employees (subject to regulatory approval in certain states). Employers can choose from a wide range of plan designs including choice of service frequency, exam co-pay, a materials co-pay, and a frame/contact lens allowance. For more information, visit www.metlife.com.

Variable Annuity

Lincoln introduced its LVIP Protected Asset Allocation series of funds for its Lincoln ChoicePlus Assurance and American Legacy variable annuity products. These products are designed to reduce volatility, protect account values, and maximize income during retirement. The fund’s portfolio managers continually review and adjust each fund’s asset allocation mix capture upside potential, while minimizing loss in down markets. For more information, visit www.LincolnFinancial.com.

Defined Benefit Termination Program and Guide

The Principal Financial Group is offering a white paper to help financial professionals and their clients manage and close down defined benefit plans in a timely, cost-efficient manner. To get the white paper, “Best Practices for Executing a Termination Strategy; Winding Down Your Hard-Frozen Defined Benefit Plan,” visit http://www.principal.com/financialpros/insights/summaries/db-plan-termination-part-two.htm.

Bilingual Mobile Website

UnitedHealthcare’s Latino Health Solutions launched a bilingual mobile website that provides health and wellness information tailored to Hispanics’ cultural and language needs. The mobile website, which can be accessed by entering m.uhclatino.com on a smart phone browser, offers extensive, culturally relevant health and wellness information, tools and resources in English and Spanish.

Book Bashes ObamaCare

A new book outlines the case for ratifying a new 28th Amendment to the Constitution. The clause is being used to justify the individual mandate in ObamaCare. The book, by Douglas J. Lising, comes with the catchy title of “Remember Roscoe Filburn Amending the Constitution: The Only Sure Way to Limit the Federal Government.” Free electronic copies are available at www.RembemberRF.com and the book can be purchased at Amazon.com.

PRESCRIPTION DRUGS

Healthcare Costs Soar When Patients Don’t Take Their Meds

For many therapy classes, less than 50% of patients take their medication as prescribed. Non-adherent patients seem to be in denial with 89% claiming that they are taking their medication as prescribed, according to the Express Scripts 2011 Drug Trend Report.

Not surprisingly, 69% of non-adherence is caused by forgetfulness and procrastination, 16% is due to the cost of the medication, and 15% stems from clinical questions or concerns the patient has about the medication or the disease.

As a result of non-adherence, the United States wastes $317.4 billion a year on unnecessary medical costs-such as emergency room visits, hospitalizations, and extra tests-to treat health complications that could have been avoided. Eliminating non-adherence would cover the cost of providing healthcare for more than 44.8 million uninsured Americans.

The report also reveals that U.S. spending on prescription drugs increased 2.7% in 2011, the lowest annual drug trend Express Scripts has ever recorded in its 18 years of measuring the statistic. The growth trend for traditional medications fell to 0.1% while the specialty-drug trend continued its rapid growth with a 17.1% increase. Also in 2011, there was a 7% growth trend in diabetes, which now accounts for the country’s largest segment of drug spending.
The top three specialty classes of drugs for inflammatory conditions, multiple sclerosis, and cancer represent 57.6% of total specialty spending. Hepatitis C was the specialty therapy class with the highest cost increase in 2011. The introduction of two new medications contributed to a near doubling of drug spending.
The average member copayment continues its annual decline, now down to $12.02 per prescription. The average copay was $12.10 in 2010 and $13.46 in 2006. For more information, visit http://Express-Scripts.com/DrugTrend.

HEALTHCARE

Murky Healthcare Pricing Affects High Deductible Plans

The Los Angeles Times Reports how difficult it is for consumers to get healthcare pricing information. To see what consumers were up against, the Times contacted 10 California hospitals and asked for the cost of a routine gallbladder surgery for someone with a high-deductible insurance policy.
Seven of the hospitals offered at least partial estimates, but the quoted prices ranged widely from $1,200 an hour for the operating room to a $8,687 facility fee. None included the cost of the doctors, although California Pacific Medical Center in San Francisco did say that the total cost for hospital services, including a room, drugs and other supplies, could be $37,217.
Hospitals must publish their average charges for the most common procedures on a state website (http://www.oshpd.ca.gov/Chargemaster.) But very few consumers are aware of this resource. Relatively few hospitals list prices on their own websites, where people are more likely to be looking for pricing information.
One hospital, Desert Regional Medical Center, didn’t return calls. Contacted later, spokesman Richard Ramhoff apologized and said Desert Regional strives to make sure everyone with a question about rates gets an answer. Another hospital said it would take 10 business days to get an estimate and another required detailed insurance information before discussing prices.
Huntington Memorial Hospital in Pasadena allows people to get an instant price quote for several common procedures including an estimate of the patient’s share after entering their deductible and coinsurance. But even those numbers exclude the thousands of dollars that physicians, anesthesiologists, and other specialists tack on for most surgeries.

A 2009 Rand study revealed that only 28% of the state’s hospitals responded to a request for an estimate from a fictional uninsured patient and less than 3% offered detailed price quotes including hospital and physician fees.

People tend to turn first to medical providers when hunting for prices. In a recent California HealthCare Foundation survey of 1,528 consumers, 26% said they had looked for information on the cost of a medical procedure in advance. Thirty-nine percent contacted a healthcare provider, 30% looked online, and 8% turned to their insurance company. Policymakers and economists have said, for years, that one way to help slow the rising cost of healthcare is for consumers to have more of their own money at stake.
A report issued earlier this year by the market research division of Thomson Reuters estimated that $36 billion could be saved annually if the 108 million Americans with employer coverage did some comparison shopping on more than 300 common medical procedures.

New Cancer Care Payment Model Recommended

In an article published in the April 12 edition of Health Affairs, Lee N. Newcomer, M.D., senior vice president of oncology services at UnitedHealthcare, explores why the cancer care payment system has not kept pace with the revolution in cancer treatment and chemotherapy regimens and calls on the health care community to consider new approaches.

The article notes that cancer therapy has made significant advances since the 1970s while the system for paying oncologists has not kept pace. “It is time for us to reconsider the ‘buy and bill’ reimbursement approach prevalent, and embrace a system that looks more holistically at patient care and rewards quality, not quantity, This is particularly important as the nation looks for new ways to address ever increasing health care costs,” Dr. Newcomer said.

The buy and bill treatment reimbursement approach provides incentives for medical oncologists to use expensive medications when less costly alternatives that deliver similar results are available, according to the report. As more expensive drugs became available, drug profits became a greater share of oncologists’ income.

In most cases, the medical oncologist purchases chemotherapy drugs at wholesale prices from manufacturers and administers them to the patient in the office. To get reimbursement, the oncologist bills the patient’s health insurance plan or payer for the retail price of the drugs, plus a charge for administering the drugs. The report concludes that not only is this fee-for-service arrangement unnecessarily costly, it does nothing to assess how much value society derives from high-priced drugs.

Dr. Newcomer’s article considers two new payment strategies being tested. The first, known as the clinical pathways approach, requires oncologists to treat clinical conditions with predefined chemotherapy regimens that are typically selected by a representative body of physicians. When several regimens are considered clinically equivalent, the least expensive one is selected. The treating oncologist can choose an alternative if a patient has a medical condition that makes the selected treatment inadvisable. Oncologists are rewarded for compliance with the clinical pathway through higher fee schedules, bonus programs, or other forms of incentives.

The second payment model, known as a bundled payment or an episode payment, reimburses participating medical oncologists upfront for an entire cancer treatment program, rather than using the fee-for-service approach that rewards volume regardless of health outcomes. The payment is based on the expected cost of a standard treatment regimen for the condition, as predetermined by the doctor. The oncologist is paid the same fee regardless of the drugs administered to the patient – in effect, separating the oncologist’s income from drug sales while preserving the ability to maintain a regular visit schedule with the patient. Patient visits are still reimbursed, and chemotherapy drugs are reimbursed at the manufacturer’s cost. The Centers for Medicare & Medicaid Services (CMS) plans to launch a bundled payment pilot program in 2014.

UnitedHealthcare launched its own episode payment pilot program in 2010 with five medical oncology groups around the country focused on determining best treatment practices and improving health outcomes. “Paying physicians for a total treatment cycle promotes better care and eliminates the incentive to prescribe costly drugs that may not be the most effective treatment option. A doctor’s income needs to be independent of drug selection. This is better for doctors, better for patients and better for the entire health care system,” Dr. Newcomer said.
Available from: http://www.cancer.org/Cancer/news/News/annualreport-u.s-cancer-death-rates-decline-but-disparities-remain

FINANCIAL PLANNING

Contrary to Predictions, Boomers Are Retiring

The popular belief is that Baby Boomers will continue to work well past the traditional retirement age of 65. But those born in 1946 are retiring in droves, according to a MetLife Study.

More are homeowners than in 2008; the value of their homes decreased by only about 5.2% on average; the majority feels they’re in good health; and 83% have grandchildren.

Fifty-nine percent of the first Boomers to turn 65 are at least partially retired; 45% are completely retired; and 14% are retired, but working part-time. Thirty-seven percent of those who are still working plan to retire in the next year. On average, they plan to retire by the time they’re 68.

Sixty-three percent are already collecting Social Security benefits, and on average began doing so at the age of 63, defying the conventional wisdom that people would wait to receive benefits until a later age in order to receive a higher payout. Among those in the survey, just over 60% are confident that the Social Security system will be able to provide adequate benefits for their lifetime.

Forty-three percent are optimistic about the future. Of the 19% who are pessimistic, 49% fault the government and 21% blame the economy. On average, the 65-year-olds say they won’t consider themselves to be old until they’re 79, a year older than reported in 2007.

Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute said, “Many of the Boomers weathered the recession well and have been able to stop working. Half of all Boomers feel confident that they are on track or have already hit their retirement goals…Overall, it’s a pretty confident group of Americans.” The survey also includes these findings:

• The average retirement age for the 1946 Boomers is 59.7 for men and 57.2 for women.

• 24% have a living parent.

• 84% are parents; 83% are grandparents, up from 77% in 2008.

• Of those not retired, 61% plan to retire at the same age as they planned one year ago.

• 31% of 65-year-old Boomers think they were at their sharpest mentally in their 40s; only 20% say they’re at their sharpest.

• Home ownership increased significantly among the studied cohort since 2008, from 85% to 93%.

• 71% are married or in a domestic partnership; 12% are divorced or separated; 10% are widowed and 7% are single.

For more information, visit www.MatureMarketInstitute.com.

DISABLITY INSURANCE

On-Site Consultants Enhance Disability Reporting

Using an on-site consultant is an effective way for employers to integrate early disability reporting and disability duration guidelines, according to a white paper from Standard Insurance Company.

The white paper asserts that an on-site consultant improves health and productivity outcomes by maximizing Early disability reporting and the use of Disability duration guidelines. To download the white paper or to learn more about The Standard’s Workplace Possibilities program, visit workplacepossibilities.com.

April 11 – by Leila Morris
Subscribe to Insurance Insider News
IN CALIFORNIA
• Aetna Goes Ahead with Rate Increases
• Consumer Reports Organization to Review Rate Filings
• New Help For Consumers Who Are Struggling with Insurers
• Employee Attitudes Vary By Region
• Spanish-Language Healthcare Resource
HOME HEALTHCARE
• Home Healthcare Reduces Medicare Spending
• In Home Care Remains a Bargain
NEW PRODUCTS
• Long-Term Disability Rider
• Disability Plan Evaluation Tool
• Voluntary Universal Life
• Dental Plan
• Return-to-Work Services
MEETINGS & EVENTS
• Healthcare Exchanges to Be Discussed at SAHU Meeting
• Meeting in Anaheim
HEALTHCARE
• Health Care Costs to Increase Less Than 10%
• Support for Health Law Reaches a New Low

IN CALIFORNIA

Aetna Goes Ahead with Rate Increases

The California Dept. of Insurance is complaining that, with this most recent increase, Aetna is hitting small employers with an average increase of 30.3% over the past 24 months. The Departments says that Aetna is increasing rates in excess of the U.S. Bureau of Labor’s medical cost inflation index.

Commissioner Dave Jones had asked Aetna to withdraw its April 1 health insurance rate increases for small employers, but the Commissioner does not have the authority to reject rate increases. Despite the request from the commissioner, Aetna has decided to implement the 1.8% average rate increases, which total an average 8% increase annually (with some receiving up to a 21.4% annual increase). Aetna files rate increases quarterly on its small employer policies.

The Department’s actuaries say that Aetna’s projections about medical cost increases are not supported by actual claims experience. The Department also says that the Aetna subsidiary that is selling health insurance in California made a 27.7% profit in 2011 and paid $1.7 billion in dividends to its parent company.

Jones said, “I am disappointed that Aetna has decided to reject my request to refrain from its latest health insurance rate increases on small employers, which are unreasonable and not justified by the company’s claims experience. Small employers are struggling in this economy and should not be hit with a 30% increase in just 24 months for health insurance for their employees. Like the recent unsustainable rate increases imposed by other health insurers on Californians, Aetna’s rate increase proves again that we need to close the loophole in California law which denies the Insurance Commissioner the authority to reject excessive health insurance rate hikes.”

Jones has authored three bills to give the Insurance Commissioner the authority to reject excessive health insurance rate hikes when he served in the State Assembly. As Insurance Commissioner, he has continued to fight to get this authority by sponsoring legislation, Assembly Bill 52, which is in the State Senate.

Consumer Reports Organization to Review Rate Filings
The California Department of Managed Health Care has awarded a $225,000 grant to Consumers Union to bolster the agency’s premium rate review program. The organization is the policy and advocacy arm of Consumer Reports. Consumers Union will provide consumer-focused feedback on health plan rate filings and develop ways to increase public engagement in health plan rate review.

DMHC Director Brent Barnhart said the partnership will help bolster accountability and transparency in health plan rate setting. Consumers Union will not only provide in-depth input on health plan premium rate filings, but will also help get more Californians engaged in how plans set those rates.”

New Help For Consumers Who Are Struggling with Insurers

The California Department of Managed Health Care (DMHC) teamed up with the Health Consumer Alliance to help those who are struggling to get health coverage and resolve problems with their health plans. Free assistance will be available online, over-the-phone, and in-person at independent, community-based offices throughout the state. The consumer assistance partnership is supported by a $1.6 million federal Affordable Care Act grant. In addition to direct assistance, the Health Consumer Alliance will provide information and education about how the health care system is changing under federal health care reform. For more information, call 888-466-2219 or visit www.HealthHelp.ca.gov.

Employee Attitudes Vary By Region

When it comes to wellness, employee benefits, and financial preparedness, some interesting regional differences are apparent in a recent Aflac study. Aflac sponsored the study of more than 6,100 U.S. workers, conducted in January and February 2012 by Research Now. For example, 70% workers in Sacramento would be at least somewhat likely to accept a new job if it offered slightly lower pay, but better benefits compared to only 53% San Diego.

Fifty-three percent of workers in San Diego say their benefit package is very or extremely influential in job satisfaction compared to only 46% of workers in Los Angeles. The following are the percentage of workers in each region who agreed with the following statements:

It is not very or not at all likely I or a family member will be diagnosed with a serious illness, like cancer.
• 69% Los Angeles
• 69% the Bay Area (San Francisco, Oakland, San Jose)
• 62% Sacramento
• 61% San Diego

I am not very or not at all likely to be diagnosed with a chronic illness, such as heart disease or diabetes.
• 65% the Bay Area (San Francisco, Oakland, San Jose)
• 60% San Diego
• 59% Los Angeles
• 51% Sacramento

I do not have a financial plan to handle the unexpected.
• 63% the Bay Area
• 62% Sacramento
• 59% Los Angeles
• 56% San Diego

I have less than $500 in savings for emergency expenses.
• 26% Los Angeles
• 24% San Diego
• 20% Sacramento
• 11% the Bay Area

I have less than $1,000 in savings for emergency expenses.
• 50% Los Angeles
• 47% the Bay Area
• 46% San Diego
• 42% Sacramento

What can my employer do to keep me in my job? Improve the benefit package.
• 59% Los Angeles
• 52% Sacramento
• 43% the Bay Area

I would be at least somewhat likely to purchase voluntary insurance benefits if my employer offered them.
• 59% Los Angeles
• 54% the Bay Area
• 54% Sacramento
• 52% San Diego

I would be at least somewhat likely to accept a new job if it offered slightly lower pay, but better benefits.
• 70% Sacramento
• 61% Los Angeles
• 60% the Bay Area
• 53% San Diego

My benefit package is very or extremely influential in job satisfaction.
• 53% San Diego
• 51% the Bay
• 46% Los Angeles

I am at least somewhat likely to participate in company fun runs.
• 58% Los Angeles
• 55% of workers the Bay Area
• 53% San Diego
• 48% Sacramento

I am at least somewhat likely to participate in health fair.
• 75% the Bay Area
• 71% Los Angeles
• 65% Sacramento
• 62% San Diego

I am least somewhat likely to participate in a biometric screening.
• 77% San Diego
• 71 % Los Angeles
• 75% in the Bay Area
• 60% Sacramento

I am at least somewhat likely to participate in health-related seminars.
• 74% the Bay Area
• 67% in Los Angeles
• 64% San Diego
• 62% Sacramento

For more information, visit AflacWorkForcesReport.com or send an e-mail at CABayArea@aflac.com.

Spanish-Language Healthcare Resource

Californians for Patient Care launched a Spanish-language website, which provides access to low-cost and free healthcare resources in California. People can access the Spanish-language website by visiting www.calpatientcare.org. Along with information on local dental care and healthcare service providers, CPC provides information on chronic disease management, how to shop for health insurance, updated information on the Affordable Care Act (ACA), and links to helpful organizations and websites.

HOME HEALTHCARE

Home Healthcare Reduces Medicare Spending

When home healthcare is used as the first setting for post acute-care, Medicare saves an average of $5,411 per patient compared to the average Medicare post-acute care episode payment, according to the Alliance for Home Health Quality and Innovation. The data suggest that home healthcare can generate significant savings across multiple clinical conditions. For more information, visit http://ahhqi.org.

In Home Care Remains a Bargain

In-home care costs rose only slightly, if at all, compared to other types of long-term care, according to a Genworth study. Nationally, the median hourly cost is $18 for homemaker services and $19 for a home health aid.

In California, the median cost is $21 per hour for homemaker services  and $23 per hour for home health aide services. The median hourly cost for homemaker services in California has increased 1.7% annually over the past five years, while the hourly cost of home health aide services has increased 2.4% over the same period.

The median annual cost for care in an assisted living facility is $39,600 nationally and $42,000 in California. The national yearly cost for assisted living has increased 5.7% a year over the past five years while long term care costs in California have increased 4.6% a year. Nationally, the median annual cost for a private nursing home room rose 4.3% annually over the past five years to $81,030 while costs in California increased 3.9% to $93,988.

Consumers have more long-term care options than ever as seen by the increasing number of home care agencies. There were about 9,200 Medicare-certified home care agencies in at the start of 2008, according to the Centers for Medicaid and Medicare. Today, there are slightly over 11,000 — an increase of 20%. Conversely, during this same period, the number of Medicare-certified nursing homes has increased less than one half of 1% from just over 15,000 to 15,100. The number of nursing homes is increasing at a slower rate and no longer represents the only option.

This competition for home care services has kept costs relatively stable, especially compared to the cost of care in a nursing home or assisted living facility. For more information, click here.

NEW PRODUCTS

Long-Term Disability Rider

AIG Benefit Solutions introduced the Income PLUS rider to its group long-term disability insurance. It provides a one-time, lump-sum payment in the event of a disabling condition. It is not offset or negated by any other sources of income and is paid in addition to the monthly benefits offered under the long-term disability product. The Income PLUS benefit can be used by employees as they see fit to help pay debt or medical bills or to provide a financial cushion during a period of disability. For more information, visit www.americangeneral.com/disability.

Disability Plan Evaluation Tool

Assurant’s new online tools compare how the indexing methods and offsets of various plans affect disability benefits. The tool will help brokers and employers evaluate options and understand how they affect the payout that a disabled employee will get from their disability plan, which can affect their level of income protection for the long term. For more information, visit www.assurantemployeebenefits.com/offsetsandindexing

Voluntary Universal Life

Lincoln Financial introduced Lincoln Employee Value Universal Life (UL). It enables employers to enrich their benefit packages with an employee-paid life insurance Employees can select up to $300,000 in benefit amounts. The policies are issued individually. As long as sufficient premium is paid, the coverage is guaranteed for life even if the employee retires or changes jobs. The premium amount that guarantees the policy for life can never be raised. For more information, visit www.LincolnFinancial.com.

Dental Plan

Guardian acquired MasterCare DENTS, which expands its dental PPO network in the Southwest and strengthens Guardian’s dental network of more than 79,000 dentists at over 181,000 locations. MasterCare DENTS includes 187 dental offices in Northern Nevada and the Lake Tahoe region of California. For more information, visit www.GuardianLife.com.

Return-to-Work Services

Prudential enhanced its return-to-work services to help employers manage absence costs and workforce productivity as well as provide support for employees who are returning from leaves of absence. Employers get absence and short-term disability reports as well as customized worksite solutions. New tracking, validation, and reporting capabilities give employers information about an employee’s leave status in real time. Reports about daily absences, the reason employees are out of work, and their expected return date help employers plan and manage staff. For more information, visit http://www.news.prudential.com.

MEETINGS & EVENTS

Healthcare Exchanges to Be Discussed at SAHU Meeting

Ron Goldstein, president and chief executive officer of CHOICE Administrators will discuss the national movement toward health insurance exchanges at the Sacramento Association of Health Underwriters’ (SAHU) monthly luncheon on April 18. The event will be held at the Citrus Heights Community Center in Citrus Heights. For more information, visit www.sahu-ca.com.

Meeting in Anaheim

The NetVU conference will be held April 26 to 29th in Anaheim. NetVU brings together over 1,000 insurance industry professionals each year to discuss the effect that new technology can have on their business. The event will feature cloud-enabled business processes, digital marketing, and best practices for efficient information management. For more information, visit www.nyhus.com.

HEALTHCARE

Health Care Costs to Increase Less Than 10%

Costs for all types of medical plans are expected to increase by 9.9% for 2012, according to a survey by Buck Consultants. This is the first time since 2001 that Buck’s survey has projected cost increases less than 10% for any type of plan.

Health insurers may have added margins to account for health care reform benefit changes mandated for 2011, but they have now removed those margins for 2012 projections, said Daniel Levin, FSA, a Buck principal and consulting actuary who directed the survey. The reduction also reflects lower expected costs as a result of the economic slowdown. Employees are trying to reduce their out-of-pocket expenses and are postponing elective medical services. Also, the trends are not varying by plan type as they have in previous surveys, added Levin. This may indicate that insurers do not see network type as a significant reason for modifying trend factors. Health insurers reported an average prescription drug trend of 9.6%. This is down 1.1% from the prior survey. It is also more than twice the 4.6% reported by pharmacy benefit managers.

For plans that supplement Medicare, health insurers reported a projected increase of 5.8% excluding prescription drug coverage, up from 5.3% in the prior survey. This lower trend of Medicare Supplement plans reflects federal controls on Medicare fees and the lower increases expected in Medicare deductibles and copays.  Levin said, “Despite the lower trend factors found in our survey, healthcare costs continue to outpace general inflation and wage increases — creating real business challenges for organizations. We’ve seen increased interest from plan sponsors for strategies to optimize alternative delivery systems, such as exchange models and accountable-care organizations.” For more information, visit http://www.buckconsultants.com.

Support for Health Law Reaches a New Low

Last month’s hearings on the constitutionality of healthcare reform didn’t help its popularity. Public support for Barack Obama’s signature domestic legislation has hit a new low in the latest ABC News/Washington Post poll, with criticism of the individual mandate as high as ever. Half the public thinks the U.S. Supreme Court will rule on the legislation on the basis of the justices’ partisan political views rather than the law.

Fewer than 40% think impartial legal analysis will carry the day with the rest unsure. Fifty-three percent of Americans now oppose the law while just 39% support it — the latter the lowest in more than a dozen ABC/Post polls since August 2009. “Strong” critics, at 40%, outnumber strong supporters by nearly a two-to-one margin in this poll, produced for ABC by Langer Research Associates.

Two-thirds continue to say the high court should throw out the entire law (38%) or at least the part that requires most individuals to obtain coverage (29%) or face a penalty; just a quarter want the court to uphold the law as is. Those numbers, like views on the law overall, are essentially unchanged from a month ago.

Republicans, who are most likely to oppose the law, are less apt to think the justices will rule on the basis of politics; 41% say so, still a not-insubstantial number when it comes to a basic assessment of independent jurisprudence. Fifty-five percent of Democrats and 52% of independents suspect the justices will go political.

Obama’s approval rating for handling healthcare has been more negative than positive steadily since he signed the Affordable Care Act (ACA) into law in March 2010. And the intensity of sentiment has been especially negative, with strong critics exceeding strong supporters by an average of 13%. However, Obama leads Romney by (48% to 38%) in trust to handle healthcare policy. Romney may have trouble challenging Obama on the individual mandate, given its similarity to provisions in the Massachusetts healthcare law that he signed as governor in 2006. Indeed, among people who oppose the ACA, a relatively tepid 58% trust Romney over Obama to handle healthcare policy. For more information, click here.

April 4 – by Leila Morris
Subscribe to Insurance Insider News
EMPLOYEE BENEFITS
• Employer Wellness Programs Are on the Rise
NEW PRODUCTS
• Survivor Life
• Fixed Annuity Guide
• Fixed Annuity
• Variable Annuities
• Value Based Benefits
DISABILITY INSURANCE
• Americans Are in Denial about Accidents & Illnesses
MERGERS AND ACQUISITIONS
• Mergers & Acquisitions Are Up
• Health Net Sells Its Medicare Prescription Business
HEALTH REFORM
• Budget Proposal Would Repeal Health Reform
• An e-Book Explains Health Reform in Plain English
IN CALIFORNIA  
• Blue Shield Teams Up With Hospitals To Reduce Claim Costs
• Attorney Analyzes Struggle Between Aetna & Providers
• Group Profits from Anti-Industry Ballot Measure
• What Californians Think About Their Healthcare
EDITORIAL OPPORTUNITIES
• Write For Us

EMPLOYEE BENEFITS

Employer Wellness Programs Are on the Rise 

More employers are starting wellness programs and the majority of organizations that have wellness programs are looking to invest and expand, according to a recent survey by Willis North America. The survey reveals the following:

• 60% Sixty percent of employers have some type of wellness program, an increase of 13% from 2010.

• 58% plan to expand their wellness initiatives with added programs or resources.

• 60% of employers have a wellness program. Of those with a wellness program, 40% have an intermediate program in place.

• The most common types of wellness programs that employers offer include the following: physical activity programs (53%), tobacco cessation programs (49%) and weight management programs (45%).

• Twenty-nine percent consider themselves to be a global organization, but only 15% have implemented a wellness program for their global employees.

• 43% say the leading barrier to measuring the success of a wellness plan is that it is hard to determine how much it affects healthcare costs compared to other factors.

• 51% promote work/life balance programs in their wellness program.

• 81% of say that, after employee assistance programs, flexible start/end times are the most common offering of work life Balance programs.

• 18% percent say that helping employees achieve work/life balance is a significant concern while 54% say it is somewhat of a concern.

For more information, visit: http://www.willis.com/Documents/Publications/Services/Employee_Benefits/Health_Productivity_Survey_2011_Final_v5.pdfhttp://www.willis.com.

NEW PRODUCTS

Survivor Life

American General Life introduced AG Secure Survivor GUL. The “last survivor” guaranteed universal life insurance product features a guaranteed death benefit and the flexibility to adapt the policy to changing needs. It offers the following: a guaranteed death benefit and guaranteed premiums, which provide protection during changing economic conditions; the ability to reduce the death benefit and premiums in response to changing needs and tax environments without losing guarantees; and a return-of-premium feature. For more information, call 800-677-3311 or visit http://eStation.americangeneral.com.

Fixed Annuity Guide

The National Assn. of Fixed Annuities is offering a new consumer publication titled, “Tips to Remember When Buying A Fixed Annuity.” For more information, visit www.NAFA.com.

Fixed Annuity

Consumers who are reluctant about returning to the equity markets can benefit from potential market gains without facing any potential for loss if the market dips. The Freedom Builder fixed indexed annuity from the American United Life Insurance Company (AUL) offers a choice of a five-, seven- or nine-year surrender charges. Clients can also choose to allocate premium to a fixed account. Four indexing strategies are tied to the S&P 500 Index. A Freedom Builder fixed indexed annuity will not lose value due to market performance. For more information, visit www.oneamerica.com

Variable Annuities

Lincoln Financial Group launched its LVIP Protected Asset Allocation series of funds for its Lincoln ChoicePlus Assurance and American Legacy variable annuity products. These funds employ capital protection and risk management techniques that enable clients to remain invested in the market to capture upside potential while minimizing loss during downturns, helping provide a more consistent pattern of returns. For more information, visit www.LincolnFinancial.com.

Value Based Benefits

Highmark Inc. is offering group customers a package of value-based benefit designs.  With Highmark’s value-based benefit design programs, employers can do the following:

• Reward employees for getting preventive care and completing a wellness profile.

• Reward employees who reach health results based on medical standards such as targeted cholesterol or blood pressure levels, a BMI target, and more.

• Offer incentives for those with chronic conditions to take their medications or visit the doctor.

• Offer incentives for employees to consider less invasive alternatives to medical procedures for which evidence-based guidelines are inconclusive, such as knee or hip replacement, and back surgery.

For more information, visit www.highmark.com.

DISABILITY INSURANCE

Americans Are in Denial about Accidents Illnesses

An Aflac study reveals that many U.S. workers are not prepared to handle the financial consequences of unexpected health issues. Sixty-two percent of workers say that it’s not likely that they or a family member will be diagnosed with a serious illness like cancer and 55% say that they are not likely to be diagnosed with a chronic illness, such as heart disease or diabetes. However, a recent study by the American Cancer Society reveals that one in three women and one in two men will be diagnosed with cancer at some point. Also, a 2011 report by the National Safety Council reveals that there are more than 38.9 million medically consulted injuries a year. A 2012 report by the American Heart Association reveals that coronary heart disease causes one in six deaths in the United States.

Despite optimism about their physical health, American workers are concerned about their financial health, many admit that they are not prepared to handle the financial consequences of a serious illness or accident in their family.

The survey also found that following:

• 51% are trying to reduce debt.

• 58% don’t have a financial plan to handle the unexpected.

• 8% of strongly agree that their family will be financially prepared in the event of an unexpected emergency.

• 28% have less than $500 in savings for emergency expenses (51% have less than $1,000).

When asked how they would pay for out-of-pocket expenses due to an unexpected illness, 57% said they would have to tap into savings; 30% would use a credit card; and 19% would have to withdraw funds from their 401k plans. Most people want employers to educate them about all available benefit options — not just traditional benefit changes or choices. Sixty percent are likely to purchase voluntary health insurance plans if their employers offer them. For more information, visit www.AflacWorkForcesReport.com.

MERGERS AND ACQUISITIONS

Mergers & Acquisitions Are Up  

In 2011, insurance mergers and acquisitions continued gaining momentum in the United States. Transactions increased in every market segment, including property-casualty, life-annuity, health, distribution and service firms, according to a study by Conning Research & Consulting.  Jerry Theodorou, analyst at Conning, said that 2011 saw a 36% increase in transactions and an 18% increase in deal values.

The environment favored mergers and acquisitions activity with low interest rates post-financial crisis economic growth, increased pressure for more regulatory capital, rising company valuations, and soft market conditions.

Stephan Christiansen, director of research at Conning said that transactions involving mutual insurers more than doubled in 2011. “We also saw a sharp increase in…transactions where insurers acquired managing general agents and other distribution solutions to support growing specialty lines of business. At the same time, private equity-backed transactions rose dramatically, with particular focus on distribution and services sectors.”  For more information, visit www.conningresearch.com.

Health Net Sells Its Medicare Prescription Business

Health Net completed the sale of its Medicare stand-alone Prescription Drug Plan business to CVS Caremark. Health Net expects about $145 million in net cash proceeds from the transaction. Health Net’s 2011 revenue for the Medicare PDP business was about $490 million. The company will continue providing prescription drug plans as part of its Medicare Advantage plan offerings.

HEALTH REFORM

Budget Proposal Would Repeal Health Reform

House Budget Committee Chairman Paul Ryan (R-WI) introduced a budget proposal to repeal the federal healthcare reform law, transform Medicare into a premium support system, and turn Medicaid into a block grant program for the states.

The budget proposal, “The Path to Prosperity: A Blueprint for American Renewal” includes a provision that raises Medicare’s eligibility age incrementally from 65 to 67 beginning in 2023 until reaching age 67 in 2034. To see an issue brief by the Council for Affordable Health Insurance, visit www.cahi.org.

An e-Book Explains Health Reform in Plain English

A new instant e-Book, “Decoding the Obama Health Law: What You Need to Know” is written by Betsy McCaughey, Ph.D. the Former Governor of New York. With a Ph.D. in constitutional history, she delves deep inside those 2,573 pages of the health reform law to highlight the important elements. To read it on the KINDLE click here: http://amzn.to/GXk51w. To read it on the NOOK click here: http://bit.ly/GXEkKx. For more information, visit http://www.paperlesspub.com

IN CALIFORNIA  

Blue Shield Teams Up With Hospitals to Reduce Claim Costs  

Blue Shield of California and the Hospital Council of Northern and Central California  are implementing industry standards to help hospitals and health plans reduce claim operating costs. A work group will focus on identifying inefficiencies in the way plans and hospitals work together on administrative processes, such as claim denials and appeals. The work group will look at ways to improve claim payment accuracy.  This collaboration is modeled after a similar effort between Blue Shield and the Hospital Association of Southern California (HASC), which represents 175 acute care hospitals in Southern California.

Blue Shield and HASC have worked together since 2010 to reduce claims operating costs. Between 2008 and 2011, Blue Shield contracted hospitals have seen their claim denials decrease from 22.8% to 17.4%, their rate of electronic submissions increase from 85.2% to 90.3%, and the claim cycle time drop from 31.9 days to 28.1 days. For more information, visit www.blueshieldca.com.

Attorney Analyzes Struggle Between Aetna & Providers

Aetna has sued seven California surgery centers for an alleged fraudulent billing scheme that it claims to be illegally striking at the very financial core of Aetna’s managed care network. Regardless of whether Aetna prevails, the case promises to have significant repercussions for the out-of-network provider community.

Below is a summary of an analysis of the issue by John Mills, an attorney at California healthcare firm Fenton Nelson:

Out-of-network providers should be concerned that health insurers might use aggressive litigation tactics to challenge any type of discount arrangement that the health insurer does not like, even if it is designed simply to avoid the unsavory process of sending patients to collections.

Health insurers have long challenged the efforts of out-of-network providers to increase patient volume by waiving or forgiving the patient’s coinsurance, deductible or other financial obligation. Until recently, we have seen that health insurers were mostly content to limit their challenge to not paying the providers’ billed charges, or claiming subsequent over-payments.

The lawsuit, Aetna Life Insurance Co. v. Bay Area Surgical Management LLC, case no. 112CV217943, filed on February 2, 2012 in Santa Clara County Superior Court, alleges that the surgery centers illegally induced its physician investors, who are in-network with Aetna, to refer their patients to the surgery centers with promises that the patients would not have any financial responsibility to the surgery centers for their out-of-network coinsurance and deductibles.

Aetna claims that the surgery centers then turned around and submitted charges for reimbursement that were artificially inflated, because they are much greater than the amount the facility expects to be paid, which is reflected by the fact that the facility does not collect those charges from the member. Aetna alleges that this type of billing scheme drives up the cost of health insurance coverage, because by not having any skin in the game, patients have no incentive to become better educated about the true costs of their healthcare. From the health insurers’ perspective, when a provider routinely waives the patient’s financial obligation for receiving out-of-network coverage, the provider’s bill reflecting a percentage of the provider’s reasonable and customary charge is a phantom number. For example, in one example listed in Aetna’s complaint, a patient who received a bunion repair was responsible for a 20% coinsurance portion pursuant to the terms of the patient’s benefit plan. Instead of charging Aetna a reasonable and customary charge minus the patient’s 20% coinsurance, the surgery center waived the coinsurance and submitted its full-billed charge to Aetna – in the amount of $66,100 – with the expectation that Aetna would pay 80% of that total amount. Although courts have previously ruled that health insurers are not obligated to reimburse the provider who routinely waives coinsurance in the manner described above, Aetna’s lawsuit raises the stakes considerably because it alleges that providers are liable for engaging in a fraudulent and illegal kickback scheme whenever they forgive a patient’s coinsurance and deductible amounts, even if the provider bills the patient but ultimately does not collect from the patient.

Aetna is asking the court to require the surgery centers to pay damages, to disgorge their profits, and to pay for Aetna’s attorney fees. Furthermore, Aetna wants the court to issue an injunction preventing the surgery centers from continuing their practice of relieving patients from paying their portion of the out-of-network provider’s charge, and to declare that such fee-forgiving practices are illegal. It remains to be seen whether Aetna’s theories of liability against the surgery centers will hold up in court. Many years ago the California Attorney General issued an opinion in which it determined that a provider’s practice of waiving copays was not fraudulent.

Moreover, as health insurers increasingly move away from a usual, customary and reasonable standard for reimbursement, and towards paying based on a maximum allowable amount that is pre-determined, the charges represented by a provider in a claim arguably are not relied on by the health insurer in making payment, and therefore cannot be the basis of a claim for fraud. In any event, out-of-network providers should be concerned that health insurers might use aggressive litigation tactics to challenge any type of discount arrangement that the health insurer does not like, even if it is designed simply to avoid the unsavory process of sending patients to collections. In a time of increasing scrutiny on providers’ charges, out-of-network providers should review their practices, their contracts with patients and other aspects of their health insurance billings to ensure that they are legally compliant and defensible against a health insurer’s lawsuit. Mills can be reached at jmills@fentonnelson.com

Group Profits from Anti-Industry Ballot Measure 

ConsumerWatchdog.org wrote a provision into a successful ballot measure it sponsored to reward groups that intervened in insurance rate cases. For its efforts, the group hauled in nearly $860,019 in such intervenor fees in 2011 and was the only group in the state to profit from the program for the fourth straight year, according to statistics by the California Department of Insurance.

Since 2003, ConsumerWatchdog.org has received more than $6.2 million in intervenor fees, according to Department of Insurance statistics. In 2010, it received $981,747 while accepting a record $2,447,126 in fees during 2009 and another $731,343 in 2008. It was the only beneficiary of the intervenor fee program during those years. The fees are the result of language written into Proposition 103, which was authored by the group and won voter approval in 1998. The same provision is included in a measure the group is sponsoring for the November 2012 ballot to regulate healthcare costs, and was included in legislation it sponsored last year, Assembly Bill 52. “It is outrageous that a special interest can write a measure and hoodwink voters into approving a law that puts money directly into the pockets of its author,” said Steven Maviglio of ConsumerWatchdogWatch.com. ConsumerWatchdogWatch.com includes details on other actions of the group and notes that its founder receives a generous salary of over $600,000. It also details FPPC fines against the group and other forms filed with the California Attorney General and Department of Insurance. http://ConsumerWatchdogWatch.com

What Californians Think sbout Their Healthcare    

Californians are concerned about the price of their healthcare and increasingly delay needed care because of high costs. Despite this, only one in four Californians surveyed has looked for price information before receiving care and many remain unaware of their insurance deductibles. This dichotomy is highlighted in “Speaking Their Mind: Californians’ Perceptions of Healthcare,” from the CHCF California Healthcare Almanac.

This survey of California adults examines health insurance coverage, access to care, cost questions, and the use of health data in decision-making.   Almost three quarters of those surveyed by Lake Research Partners anticipate that the cost of their care will rise. Of those whose costs have risen, almost 40% anticipate that the benefit they are paying more for are going to shrink, not expand.

Key findings include the following:

In spite of rising healthcare costs, most report flat premium rates and stable benefit.

Almost half of Californians with an insurance deductible do not know its amount.

Slightly more than a third of Californians delayed getting some type of healthcare in the past year because of costs.

One in four delayed getting a regular physical.

Californians in fair or poor health are the most likely to delay getting care due to costs.

About one in 10 adults does not have a regular place of care.

Nearly 40% of low-income Californians have problems getting an appointment with a specialist as soon as needed.

Here is a link to full survey: http://news.ehealthinsurance.com/pr/ehi/document/Small_Employer_Health_Insurance_Survey_2012.pdf  (includes charts).

EDITORIAL OPPORTUNITIES

Write For Us

If you would like to contribute to this newsletter, send us opinions about political or industry trends, new product announcements, white papers, industry research, etc. to editor@calbrokermag.com. (We don’t publish personnel announcements.)

We are also seeking subject matter experts to write bylined articles in California Broker Magazine. (We do not pay for articles.) Below is a list of topics that California Broker Magazine will be featuring for the rest of the year. If any of these opportunities interest you, please contact our editor, Leila Morris, at editor@calbrokermag.com.

The word count is 1,000 to 2,000. Articles can cover any topic that is of interest to brokers. Articles cannot mention a particular company or its products except for the bio at the end. It is preferred that articles include contact information in the bio so readers can respond to the author.

401(k)s
September/deadline July 30

529 Plans
October/deadline August 31

Alternative Medicine, for example, Acupuncture and Chiropractic
June/deadline April 30
November/deadline September 28

Annuities
July/deadline May 31
September/deadline July 30
October/deadline August 31
December/deadline October 31

COBRA
July/deadline May 31
September/deadline July 30

Consumer-Driven Health Plans (including HSAs, HRAs, FSAs etc.)
June/deadline April 30
August/deadline June 29
HSAs (Consumer-Driven Health)
October/deadline August 31
December/deadline October 31

Critical Illness Insurance
July/deadline May 31
December/deadline October 31

Dental Plans
June/deadline April 30
November/deadline September 28
December/deadline October 31

Disability Insurance
October/deadline August 31
June/deadline April 30 (disability insurance as an ancillary benefit)

Ethnic Marketing
August/deadline June 29
October/deadline August 31
December/deadline October 31

Group Medical Plans
August/deadline June 29

Individual Health Plans
August/deadline June 29
September/deadline July 30

Estate Planning
June/deadline April 30

Life Insurance
June/deadline April 30 as an ancillary benefit)
July/deadline May 31
August/June 29 deadline (View from the Top—We ask executives to give their take on life industry trends)
September/deadline July 30
October/deadline August 31
November/deadline September 28
December/deadline October 31

Life Settlements
May/deadline April 6
August/deadline June 29
December/deadline October 31

Limited Medical Plans
August/deadline June 29
November/deadline September 28

Long-Term Care
June issue/deadline April 30 (group LTC insurance as an ancillary benefit)
July /deadline May 31
September/deadline July 30
November/deadline September 28

Medical Tourism
July/deadline May 31

Medicare Supplements
October/deadline August 31

Premium Financing
November/deadline September 28

Prepaid Legal Plans
June/deadline April 30
October/deadline August 31

Prescription Drug Plans
September issue/deadline July 30

Self-Funded Medical Plans
July/deadline May 31
September/deadline July 30
November/deadline September 28

Vision Plans
June/deadline April 30
August/deadline June 29
October/deadline August 31
December/deadline October 31

Voluntary Benefits
June/deadline April 30
July/deadline May 31
November/deadline September 28

Wellness Plans
June/deadline April 30
August/deadline June 29

March 28 by Leila Morris
Subscribe to Insurance Insider News
EMPLOYEE BENEFITS
• Five Effective Ways to Control Benefit Costs
• Research Shows the Importance of Dental Care for Diabetics
• How Stress Affects Employees
HEALTH REFORM UPDATE
• Americans Weigh in on Supreme Court Hearings
• Conservative Group Expects Mandate to be Overturned
• The Financial Impact of Health Reform
NEW PRODUCTS
• Life Insurance Calculator
• 401(k)
• Dental Plan
• Equity Income Solutions
• Online Retirement Plan Tools
RETIREMENT PLANNING
• Americans Miss IRA Contribution Opportunities
CAREER TRANSITIONS
• Mid life Career Changers Face Significant Financial Challenges
HEALTH INSURANCE RATES
• HHS Calls Rate Hikes Excessive
IN CALIFORNIA
• Silicon Valley Employee Benefits Index
• Discount Dental Program

EMPLOYEE BENEFITS

Five Effective Ways to Control Benefit Costs

Focusing on five cost-saving measures could significantly lower benefit costs while minimizing the affect on employees, according to a white paper by Colonial Life. Colonial used in-house and industry-wide research as well as case studies to show the effectiveness of strategies to contain employee health benefit costs. The white paper finds the following strategies to be effective in controlling costs:

• Offering Wellness initiatives — Wellness initiatives were among the top cost-control strategies implemented by employers in a recent survey of government financial officers. Nearly 80% added wellness initiatives to their benefit programs and 90% of those would recommend them to others, according to a survey by the Government Finance Officers Association. A Society for Human Resource Management report reveals that 75% of employers offer wellness resources and information.

• Pre-taxing benefits/Section 125 participation – Seventy-seven percent of employers in the government financial officers survey offer pre-tax benefit plans and 86% of them recommend this option. It was the most enthusiastically endorsed strategy of the survey options.

• Providing Benefit communications and education — In the government financial officers survey, only 31% of employers were using an external service provider for benefit enrollment and 52% shifted benefit education and communication expense to suppliers. However, 78% of those who outsourced enrollment would recommend it and 84% recommended using a benefit carrier to handle benefit education and communication.

• Voluntary benefits — Only about a third of employers in the government financial officers study have moved non-core benefits to employee-paid voluntary coverage. However, 87% of employers that did so recommended this strategy.

• Dependent verification — Health plan audits can reveal a significant number of ineligible participants, including dependents who are over age or who aren’t a blood relative or a spouse, or former employees who haven’t been removed from the plan. The potential cost savings offered by dependent verification can be considerable and the service is sometimes available at no cost to the employer. Government employers who implemented these kinds of strategies report significant savings in their employee healthcare benefits. Fifty-five percent of participants in the government financial officers study saved at least 6% while 40% of them saved more than 10%. Other studies show an employer return on investment for wellness initiatives ranging from $3 to $6 for every dollar spent. The complete white paper is available in Colonial Life’s online newsroom at ColonialLife.com.

Research Shows the Importance of Dental Care for Diabetics

Diabetics who receive treatment for gum disease have lower medical costs than those who do not get treated for this condition, according to a study by Dr. Marjorie Jeffcoat of the University of Pennsylvania in collaboration with United Concordia Dental and Highmark.

Periodontal treatment and ongoing maintenance is associated with a significant decrease in the cost of medical care for people with diabetes – in the amount of $1,800 per year. Hospitalizations decreased 33% and physician visits decreased] 13% for diabetics whose gum disease was treated and managed afterward.

United Concordia has introduced UCWellness, which provides 100% coverage for maintenance following periodontal treatment and certain surgical procedures that treat gum disease and removal of plaque and tartar in patients with gum disease.  For more information, visit www.UnitedConcordia.com.

How Stress Affects Employees

More than half of employees say that workplace stress makes it hard to focus on tasks, according to a survey by ComPsych Corporation. Another 21% say stress causes them to make mistakes and miss deadlines and more than 15% say stress leads to conflicts with coworkers and superiors. “Unchecked stress can result in a number of productivity-sapping outcomes, from diminished work quality to absenteeism to coworker clashes,” said Dr. Richard A. Chaifetz, Chairman and CEO of ComPsych. For more information, visit http://bit.ly/Hc0Ced.

HEALTH REFORM UPDATE

The Financial Impact of Health Reform

Most employers say the financial impact of the Affordable Care Act (ACA) has not been as significant as they expected. Fewer U.S. employers plan to drop coverage due to the law’s mandate than was reported in 2010, according to a 2012 employer survey conducted by the Midwest Business Group on Health (MBGH) and co-sponsored by the National Business Coalition on Health (NBCH), Business Insurance, and Workforce Management.

Andrew Webber, NBCH president and CEO said, “Employers appear to be warming up to…ACA…prevention and wellness incentives, provider payment reform, medical homes, ACOs, and cost and quality transparency while expressing…frustration with the law’s slow pace towards cost containment. While employers seem to have less of an appetite for dropping coverage…, alternatives like defined contribution strategies are beginning to be considered and bear close monitoring in the years ahead.”

Many survey respondents support changes in paying providers, coordinating medical care, and providing medical cost and quality information to consumers. Employers are divided on whether they think that the Supreme Court will or should strike down the individual mandate or the entire Act.

Larry Boress, MBGH president and CEO said that, while employers are concerned about ACA’s administrative costs and reporting burdens, they show surprising support for many provisions. Most employers see value in continuing to offer health coverage to retain and recruit talent and ensure a productive workforce. Small employers fear the financial impact of future ACA changes while larger employers see the potential for cost and quality improvements.

The following are more key findings of the survey:

• Only 6% of all employers are likely to  drop health coverage for employees in order to save money. This is down by more than half from the 2010 survey results.

• Less than 30% of employers that are likely to drop coverage will raise salaries to enable individuals to buy health coverage on their own.

• Fifty-seven percent of employers that offer retiree benefits are likely to continue to offer these benefits.

•  Employers, particularly larger ones, expect the Supreme Court to uphold the ACA, but strike down the individual mandate. Forty-two percent of all employers, want the ACA to be struck down in its entirety.

• Employers favor repealing the following ACA provisions: having an excise tax on high cost plans, capping flexible savings account (FSA) contributions, prohibiting the use of FSA amounts for over the counter drugs with prescriptions, and reporting cash value of benefits on W-2 forms.

• Employers favor retaining the following ACA provisions: removing co-pays for preventive care, mandating coverage of preventive services, creating health insurance exchanges, eliminating annual and lifetime limits on essential benefits, and extending coverage to adult children.

• Employers are split on the value of some provisions, including requiring employers who drop coverage to offer vouchers to help people buy insurance, imposing penalties on employers that do not provide health benefits, mandating  individuals to get health insurance, and defining minimum essential benefits.

For more information, visit www.crain.com

Americans Weigh in On Supreme Court Hearings

Only 25% of those surveyed by a CBS News Poll say the Supreme Court should
keep health reform intact. Thirty-eight percent say the entire law should be abolished, according the poll, conducted March 21 to 25. Another 29% want the high court to only strike down the requirement that nearly all Americans obtain health insurance.  Fifty-one percent disapprove of the mandate while 45% approve.

When the Supreme Court issues a ruling this summer, it could uphold the law, strike down just the individual mandate, strike the mandate along with certain other provisions, or strike down the entire law. If the Supreme Court strikes down the individual mandate, the Administration has asked the court to also strike down the pre-existing conditions provision.

However, large percentages of Americans — even majorities of Republicans — support  elements of the healthcare law. For instance, 85% support the requirement for insurance companies to cover those with pre-existing conditions.

Other popular provisions include reducing the Medicare donut hole for prescription drug coverage (77% approve) and allowing children up to 26 years old to stay on their parents’ healthcare plans (68% approve).

Half expect the cost of their healthcare to rise as a result of the law. Just 15% expect their costs to decrease, and 27% expect the healthcare law to have no affect on their healthcare costs. One third expect the quality of the care they receive to also get worse. Just 17% expect that will improve as a result of the 2010 law.

Conservative Group Expects Mandate to be Over-turned

The United States Supreme Court began three days of hearings on a challenge to the constitutionality of the Patient Protection and Affordable Care Act (PPACA).

Legal experts at the Heartland Institute expect the health reform mandate to be struck down. The following is a summary of their account of the Supreme Court Hearings:

 I predict the Court will strike down the whole [health reform law] because the individual mandate is contrary to the fundamental federalism framework of the U.S. Constitution. Only the states have the police power that would authorize the individual mandate policy. Justice Kennedy himself has been the most zealous in protecting the power of the states against federal takeover.

The Supreme Court was uninterested in the argument that the penalties imposed on those who fail to purchase health insurance from private insurance providers – the individual mandate – amount to a tax. The Court had to cover this base, because several lower courts raised it. But its disinterest in this argument is a promising sign that the Court intends to reach the merits of the argument that the individual mandate is unconstitutional under the Commerce Clause of the U.S. Constitution.

One of the most interesting lines of questioning concerned the issue of whether someone who did not buy insurance and paid the penalty would be in violation of federal law. While president Obama’s Solicitor General said they would not, his answer was very unsure. Did the government not consider that by dodging the individual mandate, millions of Americans could technically become criminals, or that breaking this law could be considered a violation of parole or probation?

Moreover, even Obama’s lawyers have been arguing in federal courts across the country that without the mandate Obamacare is unworkable. With no severability clause in the legislation – due to overconfidence by the liberal/left, and under the legal standard that applies in the absence of such a clause – the Court will strike down the whole law as unworkable without the mandate.

For more information, visit www.heartland.org.

NEW PRODUCTS

Life Insurance Calculator

Transamerica Brokerage has created TransamericaForLife.com to help consumers determine the amount of life insurance coverage they need based on their monthly income. The Income Protection Option calculator is designed to be interactive and easy to use. For more information, visit TransamericaForLife.com.

401(k)

ShareBuilder 401k is expanding its All-ETF 401(k) platform with the addition of five new funds aimed at helping investors diversify, preserve, and grow assets over time and through various market conditions. ShareBuilder has added the following funds to its All-ETF 401(k) lineup:

• iShares Gold Fund

• PowerShares General Commodities Fund

• iShares Socially Responsible Fund

• SPDR’s International Bond Fund

• PowerShares Emerging Market Bond Fund.

For more information, visit www.sharebuilder401k.com or call 800-943-6108 (extension1).

Dental Plan

Assurant’s new Dental Network Optimization Program is available to companies with a minimum of 100 employees.  The program puts its local recruiting team to work on enlisting the dentists that employees designate as their current provider of choice. For more information, visit www.assurantemployeebenefits.com.

Equity Income Solutions

Manulife Mutual Funds launched seven funds in the  trust and corporate classes. All have portfolio management provided by Manulife. Each new corporate class enables taxable investors to switch among corporate classes on a tax-deferred basis and benefit from tax-efficient distributions from these funds. For more information, visit www.manulifeam.com.

Online Retirement Plan Tools          

The Standard enhanced two retirement plan websites by providing more streamlined online experiences for advisors, employers, and participants. Upgrades to PlanNet, a retirement plan management resource, include improved navigation that allows faster access to highly sought-out plan management tools. Enhancements to Personal Savings Center, a participant financial savings and management tool, include more prominent displays of key account information such as investment return and current balance.

RETIREMENT PLANNING

Americans Miss IRA Contribution Opportunities

Only 22% of Americans polled said they contribue to an individual retirement account (IRA), according to a survey by TIAA-CREF. For the 2011 and 2012 tax years, investors can contribute up to $5,000 – or up to $6,000 for those age 50 or older — to a traditional IRA and/or a Roth IRA.  Only 38% of Americans who own an IRA are contributing up to the annual limit and 55% are investing less than the maximum allowed amount each year, which means that hey are missing out on the opportunity to maximize their tax and savings benefits. An IRA can provide a tax-advantaged way to save for retirement.

Sixty-two percent of those polled are not aware of two noteworthy IRA features:

• Catch-up contributions that allow investors age 50 and older to contribute more than the annual maximum.

• Roth IRA withdrawal guidelines that allow contributors to withdraw money without paying taxes or penalties.

Among those who are contributing to an IRA, women (41%) are more likely than men (34%) to contribute up to the annual maximum. At 52%, Baby Boomers are most likely to fully fund their IRA each year and 45% of college graduates of all ages invest the maximum allowed amount each year.

Seventy-three percent of those age 18-34 are not aware of the maximum amount you can contribute to an IRA annually.  Fifty-eight percent of those in this age range did not know that IRA contributions grow on a tax-deferred basis.  Just 8% of Americans earning less than $35,000 a year contribute to an IRA and 13% of Americans earning $35,000 to $50,000 contribute to an IRA. For more information, visit www.tiaa-cref.org.

CAREER TRANSITIONS

Mid life Career Changers Face Big Challenges

A MetLife Foundation/Civic Ventures study reveals that millions of people need tools to help them plan and finance the transition to a new career. In fact, during the career transition period, two in three experienced reduced income or no income.

“There’s a big payoff…but making the switch is hard. Employers, policymakers and all of us in our own lives need to think creatively about how to make the investments in transitions that lead to these new, more fulfilling careers,” said Marc Freedman, founder and CEO of Civic Ventures and author of The Big Shift: Navigating the New Stage Beyond Midlife.

The survey reveals the following:

Transitioning to a new career takes time:

•  The 9 million people (ages 44 to 70) who are in new careers took about 18 months to make the transition.

• Many of those in their new careers took steps to prepare: Twenty-three percent participated in local volunteer programs; 20% enrolled in education or training courses; and 13% volunteered at their local places of worship.

•  Forty percent say they don’t feel they have the financial security to make a career change in this economy; nearly 29% don’t know what kind of job or career to pursue; and 16% don’t have the time to explore a new career.

• Those interested in new careers identified a need for transitional support through grants and scholarships for training and education (44%), volunteer programs (40%), hands-on experience through community service programs (36%), and additional education through community colleges or other schools (34%).

Financial obstacles hinder transitions:

• Sixty-seven percent of those in new careers experienced gaps in their personal income during the transition period. They earned no money (24%) or they earned significantly less during the transition than they earned at their previous jobs (43%).

• Seventy-nine percent of those who had little to no income during a transition period, said the income gap lasted at least six months and 36% said their income gap lasted more than two years. Sixty-five percent relied on personal savings to make ends meet.

•  Half of those who are interested in new careers expect the transition to be difficult and 59% of those expect the main obstacle to a career transition to be financial.

Just 14% of people interested who are interested in new careers plan to wait until 70 collect Social Security benefits. But once they learn that postponing their claims will result in larger monthly benefit checks for life, 62% said they will consider working longer.

The following recommendations are based on the suite of research:

•  Advisers can help people compare their work and retirement options, assess their assets, and make plans that may include more years of work, perhaps on more flexible schedules. The return on investment in encore transitions depends on the length and the rewards of a new career.

• New saving options. Today, older adults can use 529 college savings accounts to save for their own education, not just for their children’s. Brokerages and insurance companies are creating flexible income planning and annuity products to bridge the transition income gap. Creating a dedicated vehicle – call it an Individual Purpose Account – to save for an encore transition can clarify assets and options. Proposed savings vehicles such as Lifelong Learning Accounts could also help finance encore transitions.

• Accelerated, accessible, and affordable training. People who are interested in new careers want fast-tracked courses with flexible schedules, online or combining online and in-classroom work. Fifty-four percent who are interested in new careers say they would not pay more than $500 for additional training or education.

• Encore education assistance. The short-term and part-time programs that new career seekers favor should be eligible for financial aid; right now, many are not. The Education for Public Service Act of 2007, which provides student loan forgiveness for those who pursue nonprofit or public sector work, should change to meet the needs of people who have returned to school.

• Service as a pathway for Baby Boomers, not just young people. Paid or stipend national and community service opportunities (for example, AmeriCorps, VISTA, Senior Corps programs) can cover out-of-pocket expenses and provide valuable career experience. AmeriCorps’ basic health coverage and education award transferable to a child or grandchild (for those 55 and older) make this widely available program a viable transition option.

• More Encore Fellowships. Short-term, part-time, and paid fellowships at nonprofits can open the door to new careers. A few corporations are beginning to offer new transition assistance in addition to retirement benefits:  All Of Intel’s retirement-eligible in the United States can apply for Encore Fellowships of up to one year, which include a $25,000 stipend and health benefits for six months.

• Entrepreneurship support. Boomers and older adults have emerged as the country’s most entrepreneurial age group, creating jobs for themselves and others. Financing, coaching, and business planning can help these new ventures succeed and grow.

•  Social Security flexibility. Streamlining, clarifying existing benefit options, and creating new flexibility in starting and stopping benefits could let individuals use Social Security as an income support for new career transitions while preserving and strengthening its role in providing late-life financial security. More people need to know that even relatively modest levels of continued income can allow them to delay their Social Security claims, allow their savings and investments to grow, and require those assets to cover fewer years, improving their lifetime financial security.  For the full report, visit www.encore.org/research.

HEALTH INSURANCE RATES

HHS Calls Rate Hikes Excessive

Health and Human Services (HHS) Secretary Kathleen Sebelius announced that health insurance premium increases in nine states are unreasonable under the rate review authority granted by the Affordable Care Act.

Insurance companies are now required to justify rate increases of 10% or higher. “It’s time for these companies to immediately rescind these unreasonable rate hikes, issue refunds to consumers or publicly explain their refusal to do so,” she said.

Secretary Sebelius released a report showing that consumers are already seeing results six months after HHS began reviewing proposed health insurance rate increases. Since the rate review program took effect in 2011, health insurers have proposed fewer double-digit rate increases and more states have taken an active role in reducing rate increases. As of March 10, 2012, HealthCare.gov has posted the justifications and analysis of 186 double-digit rate increases for plans covering 1.3 million people, resulting in a decline in rate increases. In the last quarter of 2011 alone, states reported that premium increases dropped by 4.5% and premiums actually declined in states like Nevada.

• HHS determined, after independent expert review, that two insurance companies have proposed unreasonable health insurance premium increases in Arizona, Idaho, Louisiana, Missouri, Montana, Nebraska, Virginia, Wisconsin, and Wyoming. In these states, insurers have requested rate increases as high as 24%. HHS determined that the rate increases were unreasonable because the insurer would be spending a low percentage of premium dollars on actual medical care and quality improvements and because the justifications were based on unreasonable assumptions. States like California, New York, Oregon, and many others, have lowered rate increases.

Since the passage of the healthcare law, the number of states with the authority to reject unreasonable rate increases grew from 30 to 37, with several states extending existing prior authority to new markets.  For more information, visit http://companyprofiles.healthcare.gov.

IN CALIFORNIA

Silicon Valley Employee Benefits Index

PPO premiums increased at an average rate approaching 9.5%, according to the Silicon Valley Employee Benefits Index. The index also reveals the following:

•  Employee contributions increased while dependent contributions moderated.

• Average PPO (non-HSA) medical plan deductibles increased from $566 in 2011 per individual to $606 in 2012. For more information, visit www.svebi.com.

Discount Dental Program

Members of New Dental Choice, California’s first Knox-Keene licensed discount dental plan, can add discount vision, hearing and prescription drug services to their low-cost dental care program. Discount dental plans from New Dental Choice are available to individuals, families, and groups at dentists and specialists offices throughout California and across the United States. Discounts from VSP Vision Care, the EPIC Hearing Service Plan, and the CVS Caremark prescription Discount Card Program are now available to members through the New Dental Choice membership card. For more information, visit www.newdentalchoice.com  or call 858-444-2604.

March 21, by Leila Morris
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EMPLOYEE BENEFITS
• Employers Don’t Plan to Reduce Benefits
•  Americans Value Vision Health, But Still Delay Care
EVENTS
•  Conference on Healthcare Consumerism
•  Medical Travel Conference
HEALTHCARE
•  Employer-based Health Coverage Expected to Decline
•  Senate Bill Could Roll Back Consumers’ Health Insurance Savings
•  Health Reform Not Expected to Have a Big Effect on Employer Coverage
• Annual Growth Rates Decelerate for Healthcare Costs
•  Pro-Life Group Files Suit Challenging HHS Mandate
•  Medicaid Patients Have Trouble Getting Emergency Care
IN CALIFORNIA
•  Group Mobilizes Against State Mandate
•  Sterling Offers Medicare Supplement Policies in California
•  Free Mental Health Resource for California Seniors
NEW PRODUCTS
•  Retirement Services
•  Hearing Service Discount Plan for Employer Groups

EMPLOYEE BENEFITS

Employers Don’t Plan to Reduce Benefits  

Regardless of company size, only about 10% of employers plan to reduce employee benefits, according to a survey by MetLife. Ninety-one percent of those that see opportunities to leverage their benefit programs say they feel strongly that benefits can be used to retain employees, 86% say that benefits can greatly increase employee productivity, and 80% say that benefits can greatly help attract employees.

Anthony Nugent, executive vice president of MetLife said, “The workplace has changed rather dramatically since MetLife began doing its annual Study of Employee Benefits Trends.” Ten years ago, many Baby Boomers were planning to retire at age 65, Gen Y workers were just entering the workplace, and communication vehicles like Facebook and Twitter didn’t exist. But, employers’ top benefit objectives have remained consistent.

But, when it comes to employers and employers, there is a disconnect about what benefits are valuable. While 66% of the employees say that offering health benefits is an important way to drive their loyalty, only 57% of employers believed so. The divide widens when it comes to retirement and non-medical benefits. For instance, 59% of employees said retirement benefits are very important in influencing loyalty toward their employer, but only 42% of employers realized this. Fifty-one percent of employees said the same for non-medical benefits like dental, disability, and life insurance, while only 32% of employers thought so.  Sixty-two percent of employers agree that employee-paid benefits will become a more important strategy in the next five years. The survey also revealed that, compared to Baby Boomers, younger workers are more concerned about having a secure retirement.

One in three people would like to work for a different employer in 2012, but that number climbs to one in two for Gen Y employees. Not too surprisingly, people who say they hope to be working elsewhere are nearly three times as likely to admit to a decrease in the quality of their work. Conversely, the percentage of employers who say they have a very strong sense of loyalty towards their employees has grown to 59% in 2011 – a seven-year high. Fifty-eight percent say that offering benefits is an important way to increase retention. This view is most prevalent among Gen Y (63%) and Gen X (62%) workers.

The study highlights a correlation between benefit satisfaction and loyalty. Sixty-one percent of employees who are very satisfied with their benefits say they feel a very strong sense of loyalty to their employer compared to 24% of employees who are very dissatisfied with their benefits. A copy of the study is available at www.metlife.com/benefitstrends.

Americans Value Vision Health, But Still Delay Care  

Eighty-five percent of Americans recognize that managing their vision health right now means that they will have less to worry about in the future. But one in five Americans delayed their annual eye exam because they were too busy, according to a WellPoint survey. This is a concern because a routine eye exam can help detect serious health conditions, such as diabetes. In fact, 89% of Americans surveyed know eye exams can detect such chronic illnesses.

Half of Americans who participated in the survey say, at times, they feel overwhelmed by their daily to-do list. Half of those surveyed say they wish health professionals were available to help them keep their health on track. More than half say they wish it was easier to make vision care a priority in their lives. And nearly half wish they had more help managing their daily life, including their health. Forty percent say they wish there were more resources to help them manage their busy schedule.  For more information, visit www.wellpoint.com.

EVENTS

Conference on Healthcare Consumerism

The Institute for HealthCare Consumerism’s Forum will be held April 12 to 13 in Atlanta and Sept. 6 to 7 in Las Vegas. This year’s event focuses on preparing businesses to transition smoothly to cost-effective consumer-driven plans while complying with the Patient Protection and Affordable Care Act (PPACA). For more information, call 404-671-9551 or e-mail rochelle@kenotype.com.

Medical Travel Conference

The Well-Being and Medical Travel Conference will be held June 19 to 21 in Scottsdale, Ariz. The conference will cover health, wellness, and medical tourism opportunities. For more information, visit www.well-beingtravelconference.com or contact Debbie Press at 888-854-0339 or dpress@well-beingtravel.com.

HEALTHCARE

Employer-based Health Coverage Expected to Decline  

Between 2007 and 2010, the share of U.S. children and working-age adults with employer-sponsored health insurance dropped from 64% to 54%, according to a study by the Center for Studying Health System Change (HSC). The study was done for the National Institute for Health Care Reform (NIHCR). The study authors say that employer-sponsored insurance is likely to continue eroding with or without health reform, especially for lower-income families and those employed by small firms.

HSC’s Chapin White, Ph.D. said that the core threat to employer health coverage is the fact that healthcare costs are increasing faster than wages. Well before the start of the Great Recession in December 2007, a steady decline of employer health coverage was underway with fewer firms offering coverage and fewer workers taking up coverage, which is likely because of rising healthcare costs, the study found. While overshadowed by the massive employment loss, declines in access and take up each explain more than 10% of the total drop in employer coverage between 2007 and 2010.

However, the only statistically significant decline in employer health coverage, between 2007 and 2010, was among those in working families who were employed by small firms with fewer than 100 workers. They experienced declines in coverage from 51% to 45%. In addition, employer coverage dropped from 42% in 2001 to 24% in 2010 for children and working-age adults with incomes below 200% of poverty ($44,100 for a family of four in 2010).

The authors note that the health reform law targets the young adults, low-wage workers, and those employed by small firms who are falling out of employer-sponsored insurance and provides an alternative place for them to get health coverage. For more information, visit http://www.nihcr.org/Employer_Coverage.html.

Senate Bill Could Roll Back Consumers’ Health Insurance Savings

Reprinted with permission from http://www.propublica.org  

This summer, health insurance companies may have to pay more than a billion dollars back to their own customers. The rebate requirements were introduced as part of the 2010 healthcare reform law and are meant to benefit consumers. But now an insurer-supported Senate bill aims to roll back the rebate requirements.  Known as the medical loss ratio rule, it’s actually pretty simple. Under the health-care law provision, 80 cents to 85 cents of every dollar insurers collect in premiums must be spent on medical care or activities that improve the quality of that care. If not, they must send their customers a rebate for the difference.

The goal, according to the Department of Health and Human Services, is to limit the money insurers spend on administrative costs and profit. “It essentially ensures that consumers receive value for every dollar they spend on healthcare,” HHS spokesman Brian Chiglinsky told ProPublica.  Last month, Sen. Mary Landrieu, D-La., introduced a bill that would change what costs companies can include in the 15% to 20% they are allotted for overhead, salaries, and marketing. The bill, similar to a House bill introduced in March 2011 that has yet to come up for a vote, focuses on payments to insurance agents and brokers. Traditionally, these commissions are bundled into the administrative costs when making the final calculation. But insurance regulators have argued that fees paid to insurance agents and brokers shouldn’t count.

Such a change could mean big savings for insurance companies and much smaller rebates for consumers. This is the first year that companies are required to send out rebates. According to a report by state insurance commissioners, if rebates had been handed out last year, insurers would have had to pay consumers almost $2 billion. If they had carved out the broker fees, as proposed in the two current bills, consumers would have gotten only about $800 million.  Landrieu’s office did not immediately respond to our call for comment.  “[The bills] would water down the standard to a point where it becomes ineffective,” said Sondra Roberto, a spokeswoman for the nonprofit advocacy group Consumers Union. The group, which also publishes Consumer Reports, recently urged members to oppose the bill.

The rebates have gotten relatively modest attention. Only 38 percent of the public is even aware of the rule’s existence, according to a Kaiser poll.  Insurance companies have supported the two bills, claiming that the rebate rule, as it stands now, stifles jobs and actually drives up insurance premiums. A 2011 government report found that most insurance companies were, in fact, lowering their premiums to meet the requirements, as the administration had hoped.  While most insurance companies hit the 80 to 85 percent target, the few that didn’t may be required to send out rebates this year.” Some insurance companies pay an inordinate amount, as much as 40 percent, on administration and profit and not health care,” Roberto said.

The rules on rebates differ slightly depending on whether the insurance comes from a large-group plan (employers with more than 100 employees), or a small-group or individual plan. In each case, insurance companies will be required to make all their costs publicly available so consumers can see how their premium dollars are spent.  The government granted insurance companies in seven states extra time to meet the requirements.

Insurers that serve states with more rural populations, for example, tend to have higher overhead costs and cannot meet the requirement as easily, according to Eric Fader, a New York health-care lawyer. But the government decided that for all other states, enforcing the requirement wouldn’t pose any risk to the market, and that the federal government didn’t “need to coddle an inefficient insurance company,” Fader said.

Health Reform Not Expected to Have a Big Effect on Employer Coverage  

The Affordable Care Act (ACA) will only lead to a small reduction in the number of people receiving employment-based health insurance, according to a report by the Congressional budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT). Researchers say that it is unlikely that we will see a sharp decline in employment-based health insurance as a result of the ACA.  Some observers have expressed surprise that researchers don’t expect a much larger reduction given the expanded eligibility for Medicaid and the subsidies for insurance coverage purchased through health insurance exchanges that will result from the ACA.

Their estimates take account of those factors, but they also recognize that the legislation leaves in place some financial incentives for employers to offer coverage and creates new financial incentives to offer coverage. Despite the care and effort that CBO and JCT have devoted to modeling the health insurance system and the provisions of the ACA, they concede that there is tremendous uncertainty about how employers and employees will respond to the new law.

Annual Growth Rates Decelerate for Healthcare Costs 

The average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased 5.21% over the 12-months ending January 2012. This was a decline from the 5.30% annual growth rate posted for December 2011, according to the S&P Healthcare Economic Composite Index.

David M. Blitzer of S&P Indices said, “Healthcare costs’ annual growth rates decelerated modestly in January. The fall and early winter of 2011 [were] highlighted by a general upward trend in healthcare costs…This month’s data, which was through January 2012, showed a modest deceleration in most types of healthcare costs, but not by enough to show any reversal of this trend. Over the past six months or so, annual rates of change in per capita healthcare costs were generally rising.”

The following compares healthcare cost increases for December 2011 and January 2012:

Healthcare costs covered by commercial insurance plans
7.05% January
7.11% December

Medicare claim costs
2.40% January
2.52% December

Professional Services Index
5.13% January
5.37% December

The Broad Hospital Index
5.03% January
4.99% December 20111

Professional Services Medicare Index
3.32% January (a two-year low)
3.73% December

Hospital Medicare Annual Growth Rate
1.56% January
1.48% December

The Professional Services Commercial Index
6.02% January
6.15% December

Hospital Commercial Index
7.84% January
7.85% December

For more information, visit www.healthcareindices.standardandpoors.com

Pro-Life Group Files Suit Challenging HHS Mandate 

The American Center for Law and Justice (ACLJ) filed a federal lawsuit against the Department of Health and Human Services (HHS) on behalf of a Missouri business owner who says that the HHS contraceptive mandate violates his constitutionally protected religious beliefs. The lawsuit for a permanent injunction prohibiting the HHS from requiring those with religious objections to abide by the mandate. Under the mandate, employer-based health insurance must include coverage for contraceptives, sterilization, and abortion-inducing drugs.

The lawsuit marks the first legal challenge to the HHS mandate from a private business owner. Until now, only religious organizations or institutions have brought lawsuits challenging the mandate.  For more information, visit www.aclj.org.

Medicaid Patients Have Trouble Getting Emergency Care

A study published in the Annals of Emergency Medicine reveals that, compared to people with private insurance, Medicaid beneficiaries have more barriers to getting timely primary care and they have higher emergency room utilization (40% versus 18%).  Expanding Medicaid eligibility may not be sufficient to improve healthcare access. Overall, 16% of Medicaid and 9% of private insurance beneficiaries faced at least one barrier to timely primary care. For more information, visit http://www.annemergmed.com/article/S0196-0644%2812%2900125-4/abstract.

IN CALIFORNIA

Group Mobilizes Against State Mandate  

The group, Californians Against Higher healthcare Costs, is fighting the health insurance rate regulation ballot initiative proposed by Consumer Watchdog. The Coalition says the measure will create a costly new bureaucracy and give one politician nearly total control over healthcare coverage and prices, leading to higher rates and less access to care for consumers.

Early opponents of the proposed initiative include the California Medical Association, California Hospital Association, California Association of Physician Groups, California Chamber of Commerce, California Association of Health Plans and Association of California Life and Health Insurance Companies.

James Hay, M.D., president of the California Medical Association said, “This misguided measure will cause higher rates and lessen access to care, which is why doctors, hospitals, and healthcare providers oppose this measure. The new state bureaucracy…[would] limit access to patient care and do nothing to address underlying drivers of healthcare costs.”

C. Duane Dauner, president/CEO of the California Hospital Association said, “One of the biggest drivers of increasing insurance premiums stems from the chronic underfunding of the Medicare and Medi-Cal programs. When government programs fail to pay the actual cost of caring for their beneficiaries, hospitals and other providers must shift these unreimbursed costs to private insurers, which drives up premiums. This initiative does not address governmental payment shortfalls.”

Consumer Watchdog recently launched an effort to qualify the measure for the November 2012 statewide ballot. The group must collect more than 500,000 registered voter signatures by early May. Attempts to enact similar legislation  failed in the Legislature four times in the past four years. For more information, visit www.StopHigherCosts.com.

Sterling Offers Medicare Supplement Policies in California 

Sterling Insurance is now offering Medicare Supplement policies to California residents. Sterling Medicare Supplement policies are underwritten by Sterling Life Insurance Company. California residents have the option to enroll in standardized Medicare Supplement plans A, F, K, and N with Sterling Insurance. These plans offer a range of coverage options from basic to comprehensive. Sterling notes that only seven percent of eligible California residents carry a Medicare Supplement policy.

The plan includes the following features: discounted or no-cost memberships to participating fitness facilities nationwide, depending on which plan is selected.  Telephone access to a registered nurse 24 hours a day, seven days a week, to answer health related questions.  A twelve-month rate guarantee from the policy effective date providing the financial security policyholders expect.  For more information, call 888-301-1950 or visit www.sterlinginsurance.com.

Free Mental Health Resource for California Seniors

The Institute on Aging recently secured funding to expand the visibility of its friendship line throughout the state. Staff members at the 24-hour hotline offer support to seniors who are feeling lonely, isolated, depressed, or considering suicide. They can also make regular calls to seniors to see how they are doing and remind them to take medications.  Seniors can call 415-752-3778 or 800-971-0016.

NEW PRODUCTS

Retirement Services   

The Standard is offering customized retirement-planning services. Advisors can design a customized retirement plan solution for each client. This begins with essential plan services, which include record keeping and online tools. It also includes employee services, including a participant call center, quarterly newsletter, and enrollment materials. Advisors can then select which additional services to provide to each client and which services they want The Standard to handle. These include recordkeeping and financial services; administration; investment advice; participant service; and plan consulting. For more information, visit www.thestandard.com.

Hearing Service Discount Plan for Employer Groups 

TruHearing unveiled new pricing for discount hearing services for large employer groups. TruHearing’s new per-employee, per-month (PEPM) pricing was developed for employer groups that want to cover the cost of the discount for all employees. Employers can also choose the voluntary option. TruHearing provides significant savings through direct purchasing of state-of-the-art digital hearing aids from four leading manufacturers and the TruHearing private label.  For more information, visit www.TruHearing.com.

March 14, by Leila Morris
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HEALTHCARE
• Preferred Networks Are Hurting Independent Pharmacies
• HHS Loosens Insurance Exchange Rules
• Satori Receives Healthcare Savings Patent
• Healthcare Reform Is Driving Up Health Plan Costs
• Medical Care Exerts a Growing Financial Burden
• Is Slower Growth in Medicare Spending the New Normal?
• Kidney Patients Get Equal Access to Private Coverage
LONG TERM CARE INSURANCE
• Why LTC Insurance Is Risky for Life Insurers
• Broker Is Bullish on LTC Insurance
FINANCIAL PLANNING
• Retirement Confidence Slips
REVERSE MORTGAGES
• Younger Homeowners Seek Reverse Mortgages
SALES AND MARKETING
• Associations Offer Selling Opportunities for Brokers
NEW PRODUCTS
• Survivorship Life
• Generating HR Documents Automatically
• Life Concierge Program
LIFE INSURANCE
• The Life Insurance Middle Market Offers Huge Opportunities

HEALTHCARE

Preferred Networks Are Hurting Independent Pharmacies

Four members of the Association of Community Pharmacists Congressional Network (ACPCN) sued HHS and the Centers for Medicare and Medicaid Services (CMS). The pharmacies want CMS to stop approving network schemes that allow select pharmacies to entice enrollees with lower copayments while requiring non-preferred pharmacies to charge higher prices.

In little more than a year, these anti-competitive practices have driven 6.3 million of the 19.5 million Medicare D enrollees from their neighborhood pharmacy to the big box pharmacies. John Rector ACPCN’s Legal Advisor said, “The lockout of competing pharmacies…was never intended by Congress, which guaranteed…that any willing pharmacy would have equal access to the terms and conditions of any Part D network contract.”

The lawsuit charges that CMS has allowed prescription drug plans, run by benefit managers, to create these preferred pharmacy networks. “This lawsuit was filed by independent pharmacies to preserve the right of their patients to fill prescriptions at the pharmacy of their choice and receive the same pricing they would by going to these retail giants,” said Mike James, vice-president of Government Affairs for ACPCN.

Under Medicare Part D’s “Any Willing Provider Law,” a prescription drug plan must permit the participation of any pharmacy that meets the terms and condition of the plan. Seven Medicare Part D preferred retailer networks have been offered since 2011, including the exclusionary plans of Humana-Wal-Mart, AARP, Aetna, CVS-Caremark and Rite-Aid. Meanwhile, independent pharmacies have been denied access to these preferred networks. Plaintiffs say that if these practices are not changed, residents in rural or metro areas could be forced to drive miles to the find the nearest preferred pharmacy to fill their prescriptions at the preferred price.

HHS Loosens Insurance Exchange Rules 

Health and Human Services Secretary Kathleen Sebelius announced a final rule to help states set up Affordable Insurance Exchanges. Starting in 2014, these exchanges will allow consumers and small businesses to choose a private health insurance plan and offer the public the same kinds of insurance choices as members of Congress receive.

The framework preserves and, in some cases, expands the significant flexibility in the proposed rules. For example, the final rule allows states to decide whether their Exchange should be operated by a non-profit organization or a public agency; how to select plans to participate; and whether to partner with HHS for some functions. The final rule also offers significant additional flexibility in determining eligibility. It also makes it easier for small businesses to get coverage through the Small Business Health Options Program (SHOP); strengthens consumer protections; and keeps it simple for health plans interested in participating in Exchanges.

The final rule builds on over two years’ work with states, small businesses, consumers and health insurance plans. HHS says that public input was integral to the developing the final rule.

The policies offer states substantial flexibility as they design a marketplace that works for their residents. The policies offer guidance in two key areas:

• Setting standards for establishing exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an exchange, and certifying health plans for participation in the exchange.

• Establishing a streamlined, web-based system for consumers to apply for and enroll in qualified health plans and insurance affordability programs.

For more information on exchanges, including fact sheets, visit http://www.healthcare.gov/exchanges.

Satori Receives Healthcare Savings Patent

Satori World Medical received a patent for its Health & Shared
Wealth Program (http://satoriworldmedical.com/content.php?id=10), which calculates savings when a patient selects the Satori Global Network versus a U.S. based hospital and physician for a surgical procedure.

Healthcare Reform Is Driving Up Health Plan Costs

Some employers are already finding that complying with the Patient Protection and Affordable Care Act (PPACA) is driving up costs for their group health plan. The majority expects to pass the price increases on to employees, according to a survey by Willis Group Holdings, a global insurance broker.

Fifty-six percent of employers that have quantified the cost of complying with the PPACA, say it has increased the cost of their plans. More than 15% say that the cost increase is 2% to 5%. More than 15% say it’s more than 5%. Employers say that their most significant cost drivers are requirement to provide coverage to adult child coverage up to age 26 and the removal of the annual/lifetime limits for essential health benefits.

More than half expect similar employers to pass more costs for dependent coverage to employees. One-third of employers expect similar employers to reduce coverage to the lowest-cost package to avoid the pay-or-play penalty. Nearly two-thirds of employers expect employee contributions to increase. A majority of employers plan to expand their wellness programs.

In the next 12 months, 40% of employers will review strategies for communicating with employees about their benefits. Only one-third of employers that wanted to hold onto grandfathered plans have done so. The rate of losing grandfathered status has far out-paced the Department of Health & Human Services’ expectations for 2012. This suggests that employers have had to make many plan changes to offset cost increases.

Jay Kirschbaum of Willis said, “Despite the increased costs, employers continue to value providing medical benefits to their employees. They do not plan to eliminate that benefit, but are considering the possibility that the state exchanges will provide a potential option.” For more information, visit http://www.willis.com.

Medical Care Exerts a Growing Financial Burden

In the first six months of 2011, one in three people were in a family experiencing financial burden of medical care. One in five were in a family having problems paying medical bills; one in four were in a family paying medical bills late; and one in 10 were in a family that had medical bills they could not pay. Almost 24% of children were in families that had problems paying medical bills compared to 21% of adults aged 18 to 64, 10% of adults aged 65 to 74, and 7% of adults aged 75 and over. For more information, visit http://www.cdc.gov/nchs/data/nhis/earlyrelease/financial_burden_of_medical_care_032012.pdf

Is Slower Growth in Medicare Spending the New Normal?

Medicare spending has slowed due to the economic downturn. But other factors may slow Medicare spending over the long term, such as cost-control efforts and the potential for broader provider payment reform, according to an analysis by researchers at the Center for Studying Health System Change (HSC), published online in the New England Journal of Medicine.

The Congressional Budget Office expects Medicare spending, per enrollee, to grow more slowly than the overall economy over the next decade. Researchers point to a new Medicare payment policy and looming reductions in the growth of Medicare payment rates for almost all categories of providers other than physicians as enacted in the Affordable Care Act (ACA). While some have questioned the sustainability of the ACA reductions, merely undoing the ACA cuts would mean reverting back to the old normal of unsustainably high growth in Medicare outlays, according to the article.

The ACA planted the seeds for accountable care organizations (ACOs). It bundled payment for episodes of care, patient-centered medical homes, and incentives for reducing re-admissions. Now those seeds offer a way forward, the authors write. For more information, visit http://www.hschange.Fore org/CONTENT/1278/.

Kidney Patients Get Equal Access to Private Coverage 

The Dept. of Health and Human Services clarified that the Medicare Secondary Payer (MSP) provision will apply to small group plans sold in the new health insurance exchanges. Under law, MSP allows those diagnosed with kidney failure to maintain their group health plan private coverage for 30 months before enrollment in Medicare. The rule clarifies that they will be granted the same right to maintain private coverage for up to 30 months as people with group health coverage purchased outside of the exchange. It ensures equal access for patients end stage renal disease who chose to purchase insurance through an exchange.

The Dialysis Patient Citizens (DPC) noted that this 30-month period is crucial for many patients because it minimizes interruptions in care during the critical transition to dialysis or a transplant and it allows patients to continue using their preferred providers.

LONG TERM CARE INSURANCE

Why LTC Insurance Is Risky for Life Insurers 

Long-term care (LTC) insurance is one of the riskiest products that U.S. life insurers offer. This risky environment is underscored by Prudential’s decision to join a growing list of large insurers to exit the LTC market, according to an analysis by Fitch Ratings.

Regulations that protect LTC policyholders from unexpected price increases limit the insurers ability to re-price LTC policies. Insurers that have been overly optimistic on initial pricing assumptions are seeing significantly lower returns. Insurers have raised prices on the policies in order to fill the gap. But a number of states have enacted rate stabilization regulation, which makes it clear that it will not be easy to increase premiums.

Higher than expected claims and historically low interest rates have hurt LTC results. Fitch says that LTC business is vulnerable to interest-rate risk because of the long-tail nature of the product and future renewal premiums. Low rates continue to curb the investment income that’s needed to help fund LTC benefits. “We believe mispricing of the LTC product will continue to weigh on life insurers’ earnings and capital, but…in-force individual LTC business accounts for less than 2% of industry reserves and premiums.” For more information, visit www.fitchratings.com.

Broker Is Bullish on LTC Insurance 

While carriers like Prudential are getting out of the long-term care business, LTC Financial Partners LLC (LTCFP) says it plans to offer more choices for individuals and employee groups. Cameron Truesdell, LTCFP’s CEO said, “In a time of economic transition, it’s logical for carriers to gravitate toward their strength. For Prudential that appears to be the group market. Other carriers have gone in the opposite direction.”

Truesdell said, “The choices we offer are getting more substantial all the time. That’s true for individual policies as well as our multi-life offerings for groups.”  The offerings are from multiple insurance carriers including the following:

• John Hancock
• MedAmerica
• LifeSecure
• United of Omaha Life
• Mutual of Omaha
• Transamerica

LTCFP and MedAmerica recently announced a distribution agreement to offer a broad suite of long-term care insurance products with reduced underwriting and multi-life discounts to employee groups, called “LTC Complete Worksite Solutions.”

“This is an example of the bullish trend of our business,” Truesdell says. “We are constantly building our policy options and the way we deliver and support them.”  “Long-term care protection will be available through us, at very affordable rates, in a number of innovative ways, such as LTC riders to life insurance policies,” he added. For more information, visit http://www.ltcfp.com.

FINANCIAL PLANNING

Retirement Confidence Slips

Americans’ confidence in their ability to retire is the lowest it has been in two decades, according to a survey by the Employee Benefit Research Institute. Just 14% are very confident that they will have enough money to live comfortably in retirement –- down from a peak of 27% in 2007. Only 14% of Americans are very confident they will have enough money to live comfortably in retirement. Workers with the most debt have the least confidence.

Forty-two percent of workers say job uncertainty is the most pressing financial issue facing most Americans. However, retirement confidence is measurably higher among workers who’ve taken positive financial actions, including saving in an employer-sponsored plan, getting advice from a financial professional, and calculating retirement.

Sixty percent of workers have less than $25,000 in total household’s savings and investments, excluding the value of their primary home and any defined benefit plans.

Sixty-six percent of workers say they or spouse has saved for retirement, a continuing decline from the 75% measured in 2009. In 1991, 11% of workers expected to retire after 65. That number has grown to 37% by 2012. Half of retirees say they left the work force unexpectedly due to health problems, disability, or changes at their employer, such as downsizing or closure. For more information, visit www.ebri.org.

REVERSE MORTGAGES

Younger Homeowners Seek Reverse Mortgages

Since the collapse of the housing market in the U.S, more younger people are seeking reverse mortgages, according to a study by the MetLife Mature Markets Institute. Boomers age 62 to 64 represent one-in-five prospective borrowers of reverse mortgages, which allow people to draw on home equity without monthly mortgage repayments. The average age of those who have gone through reverse mortgage counseling is now 71.5 years.

The Dept. of Housing and Urban Development (HUD) reports a similar decline in the average age of borrowers to age 73. Forty-six percent of homeowners who are considering a reverse mortgage are under 70. The percentage of 62- to 64-year-olds who are prospective borrowers has increased 15% since 1999, despite the fact that younger applicants have had lower available loan limits.

As part of mandatory counseling for all reverse mortgage applicants, HUD-approved counselors collected the data for the study. Sixty-seven percent of recent counseling clients have a conventional mortgage that will need to be repaid if they decide to take out a reverse mortgage. Twenty-seven percent have both housing and non-housing debt. Borrowers with sizable existing debt may deplete home equity rapidly.

Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute said, “Since reverse mortgages do not have income requirements and other forms of credit have become less accessible, these loans will become more attractive. It is worth noting that HUD stated recently that lenders may conduct financial assessments of applicants to ensure that they have the ability to meet their loan obligations. There is a good chance home equity will evolve from being an emergency measure to one that is part of a strategic retirement plan.” said Barbara Stucki, Ph.D., vice president for home equity initiatives for the National Council on Aging.

The report also highlights the following:

• A Reverse mortgage is no longer a one-size-fits-all solution because of recent changes including lower loan limits, a fixed-rate HECM, and a new loan option.

• Some consumers assume that a fixed rate is preferable to an adjustable rate HECM. But a fixed rate HECM can be more costly and offer less flexibility.  In addition, lenders can now offer reverse mortgages with minimal upfront costs, which can make the loan attractive for more short-term needs.

• By transferring existing debt from their home to the reverse mortgage loan obligation, borrowers will only defer these mortgage payments (with interest) until they die or move out. Borrowers must also meet all of their other reverse mortgage obligations including making timely property tax and homeowners insurance payments.

• Borrowers may benefit from involving other professionals in decision-making, including legal, financial, and tax advisors. They may also consult with medical advisors to provide input on health challenges that could make it hard to stay at home.

• Reverse mortgage borrowers can stay in the home as long as they wish. But the loan will have to be repaid sooner or later. Financial advisors, senior advocates, housing specialists, and other experts will need to develop appropriate exit strategies to guide consumers through these transitions.

• Homeowners can use home equity to pay for home repairs or pay off tax burdens. In some situations, a reverse mortgage can forestall a foreclosure.

• Using home equity as more than a last resort can help keep cash shortfalls from becoming major problems, but the growing trend toward borrowing at earlier ages raises concerns. Aging Baby Boomers, who are likely to live longer than their parents, may not have saved enough for their additional retirement years. Consequently, seniors they may need to preserve a portion of their home equity. For more information, visit www.MatureMarketInstitute.com.

SALES AND MARKETING

Associations Offer Selling Opportunities for Brokers

More than one-third of the members of associations and affinity group are receptive to getting insurance through the association, which reveals an important opportunity, according to a MetLife survey. David Brennan of MetLife said that many Americans are looking for financial protection in the wake of healthcare reform, the economic recession, and a shift to more employee responsibility for benefits. Having customized tactics and a deep understanding of the marketplace can help convert those potential customers into actual purchasers, he added.

The study analyzed eight association types – unions, credit unions, lobby/political associations, professional associations, government associations, alumni groups, special interest/social/recreational groups, and affinity groups. The study reveals the following:

• 28% of members who joined an association looking to purchase coverage are seeking life insurance and 25% are seeking health insurance.

• Half of members who are interested in getting insurance through an association say the main reason is to take advantage of rate advantages. Having the organization’s leadership review the insurance product can help generate members’ interest.

• The consumer climate demands a multi-channel approach to broker-client communications. Forty percent of association members prefer to find out about insurance offerings by working with an agent in person over the phone. Thirty-nine percent prefer to get information through the mail and 27% prefer e-mail. For more information, visit www.metlife.com.

NEW PRODUCTS

Survivorship Life

Aviva’s new indexed life insurance product offers financial protection for small businesses, blended families, and people whose estate tax planning needs may change. Aviva USA’s Survivorship Builder combines protection for more than one person on a single policy. It offers customers multiple solutions during various stages of their lives. Survivorship life insurance can help survivors handle a sudden tax burden, replace income, gift assets to grandchildren and keep the family business in the family. For information, visit www.avivausa.com.

Generating HR Documents Automatically

Arch is offering software that enables users in the U.S. and U.K. to generate documents like employee contracts and employee transfers automatically.  Since the data comes directly from the SAP solution, documents are consistent and less prone to human error. Arch says that the software saves significant money, time, and paper. For more information, visit  http://www.arch-global.com.

Life Concierge Program 

ING has introduced the ING Global Life Concierge Program to help agents, employers, and policyholders understand the ING Indexed Universal Life-Global Plus product and self-owned life and retirement (SOLAR) insurance arrangements. With SOLAR insurance arrangements, an employer can pay for all or some of the annual premiums, which may be tax-deductible for the business. These arrangements may also offer employees tax-deferred wealth accumulation as well as supplemental retirement income and death benefits. The concierge program is designed to help agents and their clients with ING IUL-Global Plus policy questions, specifically those involving retirement income distributions and tax considerations. For more information, visit http://ing.us.

LIFE INSURANCE

The Life Insurance Middle Market Offers Huge Opportunities

There is a $10.2 trillion life insurance protection gap for the middle market, which is a huge opportunity for life insurers, according to a study by Conning Research & Consulting. “Over the past five years the missed opportunity in the middle market…has grown significantly,” said Terence Martin, director at Conning Research & Consulting.

The financial crisis and the recession have had far-reaching effects on income, asset values, and debt levels, all of which increased the size of this missed opportunity. In addition, the rising cost of healthcare, especially in the middle market, may create an emerging need for life insurance planning.

Stephan Christiansen, director of research at Conning, said that life insurers have significant challenges penetrating the middle market, such as distribution cost, and access. But these challenges may finally be eased with the Internet and social media. In addition, predictive modeling and a more automated underwriting process hold promise for insures that struggle with the cost of underwriting. As insurers seek growth in the recovering economy, they will analyze the technology commitment that’s needed to succeed in the middle market. The report, “Opportunities in Reaching the Middle Market with Life Insurance” is available for purchase from Conning Research & Consulting by calling 888-707-1177 or by visiting the company’s web site at http://www.conningresearch.com.