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
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.
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.
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.
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
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 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.
