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IBG Annual Holiday Party a success!

Posted on December 23, 2008

The IBG annual holiday party was held aboard The World Yacht in New York City (an IBG client). A great time was had by all with great food, beautiful views, great weather and stimulating conversation. We look forward to the second annual client holiday party next year.

 

 

 

 

 

 

 

 

 

 

Workers more thrifty with health care dollars

Posted on December 10, 2008

Posted On: Dec. 10, 2008 3:31 PM CST
Colleen McCarthy
More U.S. workers are taking steps to lower their medical costs and are unwilling to pay higher health care premiums, according to a Watson Wyatt Worldwide survey released Wednesday.

Citing the recent economic crisis and rising health care costs, Washington-based Watson Wyatt said 19% of employees surveyed were willing to pay more money out of their paycheck in order to keep health costs down. Last year, 38% of employees were willing to pay higher premiums.

The survey of nearly 2,500 employees of large U.S. companies conducted in May and June also found that nearly half of the respondents had chosen a lower-cost drug option in the past year. In addition, more employees delayed visiting a doctor until they had serious symptoms, and an increasing number of workers talked with their doctors about seeking more affordable treatments.

However, the survey also found that some workers are taking actions that could lead to higher medical costs in the future, including skipping doctor’s appointments altogether, avoiding filling prescriptions and skipping doses of medicine.

As workers continue to look for ways to save money, “employers stand to gain from reinforcing messages on preventive care, wellness resources and the importance of following prescribed drug regimens,” said Cathy Tripp, national leader of consumerism at Watson Wyatt, in a statement.

Cost main barrier to offering health plans: Survey

Posted on October 23, 2008

Posted On: Oct. 21, 2008 4:28 PM CST
Kristin Gunderson Hunt
Many employers do not offer health care benefits to their employees because of the high cost, and a large percentage of employers are unwilling to contribute more than $50 a month for those benefits.

Forty-three percent of the employers that do not offer health plans said cost was the primary reason; 59% of the same group of employers said they were willing to contribute between $0 and $50 per employee per month for health benefits. Further, 49% of respondents said they weren’t at all likely to begin offering coverage within the next three years.

Surveyed 3,418 employers, of which 545 do not offer health benefits. Employers surveyed were classified as small (10-499), large (500+) and very large (20,000+). The results released are part of the consultant’s larger National Survey of Employer Sponsored Health plans, which will be released in November.

Employers were inclined to disapprove of each of the eight health care proposals offered by presidential candidates, members of Congress and state governments mentioned in the study, and no one proposal—from “play or pay” reform to a proposal that would end or cap the tax exclusion for employer-sponsored health benefits—was decidedly more popular.

Employers in Massachusetts, Vermont and San Francisco, where health care reforms requiring employer compliance have taken place, were asked about the effects of such reforms.

Sixty percent of small employers in those geographic areas said they complied with the law with minimal or no additional resources; 37% said some resources were expended but other priorities were not affected; and 3% said considerable resources were expended and other priorities were affected.

Large employers in those areas, on the other hand, were affected differently. Thirty percent said minimal or no additional resources were used to conform; 60% said other priorities were not affected while some resources were expended; and 10% reported their priorities were affected and considerable resources were expended.

Bush signs mental health parity bill

Posted on October 4, 2008

Posted On: Oct. 03, 2008 2:38 PM CST
Jerry Geisel
WASHINGTON—Following final congressional approval, President Bush Friday signed mental health care benefits parity legislation into law.

The parity provisions, included in a broader financial services bailout bill, passed the House earlier Friday on a 263-171 vote. The legislation, which the Senate had approved earlier in the week, will require health care plans to provide the same coverage for mental disorders as they do for other medical illnesses—a requirement that most group health plans now do not meet.

For example, plans no longer will be allowed to limit the number of annual outpatient visits for treatment of mental disorders while not imposing a comparable limit on the number of outpatient visits for other medical problems.

While the plan changes would be extensive, the cost impact is expected to be modest. The Congressional Budget Office last year estimated that enactment of a similar bill would boost health insurance premiums by an average of about 0.2% a year.

The measure will take effect Jan. 1, 2010, for most calendar-year plans.

Senate-passed bailout bill includes mental parity

Posted on October 2, 2008

Posted On: Oct. 02, 2008 8:25 AM CST
Jerry Geisel
WASHINGTON—The Senate has again approved mental health care benefits parity legislation, bringing the measure closer to passage.

In an unusual strategy, Senate leaders attached the massive financial services bailout legislation, along with provisions to extend certain expiring tax code provisions, to a parity bill the House had passed last week. The Senate then Thursday evening approved the bill, sending the legislation back to the House, which is expected to consider the measure Thursday or Friday.

The Senate action is the latest twist in the mental health parity measure’s long odyssey through Congress.

Earlier, separate and differing parity bills were approved by the House and Senate. The differences were resolved this summer, and the Senate last week approved the compromise parity bill as part of an energy and tax measure, while the House approved a stand-alone parity bill.

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If given final approval, the parity legislation would require most employers to amend their health care plans to upgrade mental health care benefits coverage.

The legislation would require health care plans to provide the same coverage for mental disorders as they do for other medical illnesses. That would put an end to widespread discriminatory plan designs in which employers limit the number of annual outpatient visits for treatment of mental disorders but do not impose a comparable limit on the number of outpatient visits for other medical problems.

While the plan changes would be extensive, the cost impact is expected to be modest. The Congressional Budget Office last year estimated that enactment of a similar bill would boost health insurance premiums by an average of about 0.2% a year.

If the measure is enacted, it would take effect Jan. 1, 2010, for most calendar-year plans.

Further health benefit cuts occurred in 2008: Survey

Posted on October 1, 2008

Posted On: Sept. 24, 2008 3:40 PM CST
Joanne Wojcik
Health benefits continued to erode this year as employers tried to grapple with escalating expenses by cutting back coverage and shifting more of the cost burden to workers by raising premium contributions, deductibles and other out-of-pocket costs, according to the 2008 Kaiser Family Foundation/Health Research and Educational Trust survey.

Deductibles in preferred provider plans grew by an average of $99 to $560, but perhaps more significant was the surge in the prevalence of high-deductible health plans. This year, 18% of workers are enrolled in plans with deductibles of $1,000 or more, up from 12% in 2007 and 10% in 2006, according to the survey, released Tuesday.

High-deductible plans were more prevalent at small employers, defined as those with three to 199 employees. While just 9% of workers at large employers are enrolled in high-deductible health plans this year, 35% of those at small employers are, up from 8% and 21%, respectively, in 2007.

The share of employees enrolled in consumer-directed plans—high-deductible plans that include a tax-preferred savings option such as a health savings account or a health reimbursement arrangement—also increased to 8% in 2008 from 5% last year and 4% in 2006. The growth in CDHPs occurred mostly among small firms, where 13% of employees are now enrolled in this type of plan, compared with 8% in 2007. By contrast, just 5% of workers at large employers are enrolled in such plans, statistically unchanged from last year.

Premiums for both HDHPs and CDHPs are generally lower than for other types of health plans, though in addition to premiums, employers may also contribute to the savings accounts.

“What really jumps out at me from the survey this year is that we may be seeing the tip of the iceberg of a trend toward less comprehensive, skimpier insurance for many working people with higher deductibles and higher out-of-pocket costs,” said Drew Altman, president and chief executive officer of Washington-based KFF, during a press conference Tuesday morning in Washington, where the results of the annual survey were released.

“We’re seeing a change in the comprehensiveness of coverage, especially at small firms. We also found a noticeable growth in high-deductible health plans, especially for people who work for small employers,” Mr. Altman said. “It’s almost like we’re doing two different surveys, one for small employers and one for larger ones.”

All of these developments are driven by cost, he said.

Although the survey found the rate of increase averaged just 5% in 2008—down from 6.1% in 2007—collectively over the past 10 years, employers’ share of health benefit costs have grown by 119%, while employees’ share has increased 117%, Mr. Altman reported. As a result, the average annual cost of single coverage for all types of plans was $4,704 in 2008, compared with just $2,196 in 1999, while average family coverage premiums reached $12,680 in 2008, up from $5,791 10 years ago. Last year, single-coverage premiums averaged $4,479 and family coverage premiums averaged $12,106.

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“The rate of increase in premiums this year is not an outsized one, like we’ve seen in the past, but the long-term picture in terms of premiums and costs to people is absolutely unchanged. So over the 10 years…premiums have risen three-and-a-half times faster than wages,” he said.

The survey also found that 40% of employers were either very likely or somewhat likely to increase the amount employees pay for health insurance next year, while 41% said they were either very likely or somewhat likely to raise deductibles; 45% said they were either very likely or somewhat likely to increase office visit copays or coinsurance; and 41% said they either were very likely to somewhat likely to increase the amount employees pay for prescription drugs.

“Less comprehensive, skimpier insurance is cheaper, as all employers have discovered, but it does shift more of the cost of care to working people which is a real burden at a time when they’re also at the same time being hit by rising energy prices with stagnant wages, declining 401(k) and for many people difficulty paying the rent and mortgage and their credit card debt as well,” Mr. Altman noted.

The 2008 KFF/HRET survey included responses from 1,927 randomly selected public and private employers located around the United States. It was conducted by telephone between January and May 2008.

ERISA doesn’t pre-empt San Francisco health mandate

Posted on October 1, 2008

Posted On: Sept. 30, 2008 1:45 PM CST
Joanne Wojcik
SAN FRANCISCO—A San Francisco law that requires employers to spend a set amount on employee health care costs is not pre-empted by the Employee Retirement Income Security Act of 1974, the 9th U.S. Circuit Court of Appeals has ruled.

The 9th Circuit reasoned that the ordinance does not conflict with ERISA because it does not require the creation of an “employee welfare benefit plan” within the meaning of that federal law. In its Sept. 30 decision, the court cited two U.S. Supreme Court cases that found “an employer’s obligation to make monetary payments based on the amount of time worked by an employee, over and above ordinary raises, does not necessarily create an ERISA plan.”

However, because the San Francisco decision conflicts with a 2007 4th U.S. Circuit Court of Appeals ruling that had held a similar law in Maryland was pre-empted by ERISA, the issue ultimately may be decided by the U.S. Supreme Court, ERISA experts predict.

“This would unwind the fabric of ERISA if it were allowed to stand, because you’d have states, cities and even local municipalities setting different levels of requirements for health care benefits in each of their jurisdictions. It goes against the very policy ERISA put in place,” said J.D. Piro, an attorney with Hewitt Associates Inc. in Norwalk, Conn.

“A lot of states and cities have been waiting for this case to see whether it’s a blueprint or not. Frankly I don’t think we learned too much more today. We don’t have the definitive answer, which I think will only come from the Supreme Court around whether this works or not,” observed Andy Anderson, of counsel at Morgan, Lewis & Bockius L.L.P. in Chicago.

In Golden Gate Restaurant Assn. vs. City and County of San Francisco, the restaurant owners group had successfully challenged the 2006 San Francisco ordinance, arguing that its spending requirements were pre-empted by ERISA, which precludes state and local governments from enacting laws dictating the contents of employee benefit plans. Although the U.S. District Court on Dec. 26, 2007, ruled in favor of the restaurant group, its decision had been stayed pending the outcome of the appeal.

The case has received national attention, and the U.S. Department of Labor filed an amicus brief warning that upholding the San Francisco law would “open plan sponsors to a potentially bewildering and conflicting array of mandates.”

Under the San Francisco law, employers with 100 or more employees have to make health care expenditures of at least $1.76 per hour for every eligible employee working in the city for at 10 or more hours per week. For-profit employers with between 20 and 99 employees and nonprofit employers with 50 or more employees have to spend $1.17 per hour for eligible workers. Employers that fail to comply with the ordinance are subject to fines equal to 150% of the amount they are mandated to spend on employee health care.

Kevin Westlye, president of the restaurant association, said it is considering its options, which include either requesting an en banc hearing of the entire 9th Circuit or appealing the decision to the U.S. Supreme Court.

“ERISA is something that Congress passed to allow uniform administration of employee benefit programs,” Mr. Westlye said. “We think the practical application of this will certainly be the end of ERISA, because if San Francisco is allowed to establish an employer mandate for health care, then other municipalities both in California and in the rest of the country will be allowed to also establish an employer mandate for health care, and the idea for national uniformity of health care will go away.”

Health care cost trends leveling: Report

Posted on July 29, 2008

Posted On: July 25, 2008 3:43 PM CST
Joanne Wojcik
The growth in health care costs paid by employers is expected to level off in 2009 following five years of deceleration, a report from PricewaterhouseCoopers’ Health Research Institute predicts.

Based on a survey of more than 500 employer and health plans providing coverage to 11 million lives, New York-based PwC found that medical costs will increase by 9.6% on average next year, compared with an average of 9.9% in 2008.

Improved medical management and a focus on prevention and wellness are among the tools that employers are using to slow down the growth in health care costs, according to PwC’s report, “Behind the Numbers: Medical Cost Trends for 2009,” which was released Thursday.

Two-thirds of employers contract with disease management programs that focus on reducing and eliminating hospitalization, the report found. In addition, two-thirds of employers have adopted wellness programs, nearly half of which say they are somewhat effective at reducing costs.

Generic substitution of prescription drugs also continues to reduce health care costs for employers, according to the PwC report. However, this benefit is likely to diminish, since fewer brand-name drugs are going off patent in 2009, PwC researchers noted.

Although the rate of increase in health care costs is being tempered somewhat, PwC found that two major factors continue to contribute to employers’ growing medical tab: new construction in the health care industry and cost-shifting from the uninsured.

In particular, the health care industry is in an era of booming construction in response to increasing consumer demand, PwC reported. Moreover, if there is a recession in 2009, the health care industry could grow even more. During previous recessionary periods, health care has increased its portion of the gross domestic product and medical prices have risen faster than other prices, PwC pointed out.

In addition, one of every four dollars spent by private payers is making up for decreasing government financing to Medicare and Medicaid, the PwC report found.

A copy of the complete report can be found at www.pwc.com.

Massachusetts wants employers to pay more

Posted on July 21, 2008

JERRY GEISEL
Governor cites greater-than-expected costs; plan also would toughen fair-share testing
BOSTON—The governor of Massachusetts says employers should pay more to help fund the burgeoning cost of moving the state closer to universal health insurance coverage.

Employer groups are troubled by the proposed change, which will impose a hefty financial assessment on employers, such as many retailers, that have long waiting periods before new employees are eligible for health coverage. Under current rules, many such companies are exempt from the penalty.

Gov. Deval Patrick last week proposed that state regulators tighten an existing rule that requires employers with at least 11 full-time employees in the state to pass one of two tests to prove they are making a “fair and reasonable” health insurance premium contribution to avoid an annual assessment of $295 per employee.

Revenues from the assessments, which are running much lower than earlier projections, are used to subsidize premiums in a state program—one of the lynchpins of Massachusetts’ 2006 landmark health care reform law—that provides coverage for eligible low-income uninsured residents.

Under the current rule adopted in 2007 by the Massachusetts Division of Health Care Finance and Policy, an employer is exempt from the annual assessment if at least 25% of full-time employees are enrolled in its group health insurance plans.

If that primary test is not met, employers that pass a secondary test—by paying at least 33% of the premium for individual coverage for employees within 90 days of their beginning work—are exempt from the assessment.

Nearly all employers in the state offering coverage have been able to pass one test or the other.

Under Gov. Patrick’s proposal, though, employers would have to pass both tests to be exempt from the $295 assessment, a change that would result in many more employers being forced to pay, state business groups say.

The tightening of the so-called Fair Share Contribution rule is intended to raise $33 million in new revenue, up from the roughly $7 million that was generated during the first fiscal year that the tests were imposed.

If, however, revenue produced from the Fair Share tests falls short of $38 million, the governor is proposing that the Division of Health Care Finance and Policy should have the authority to raise the $295 assessment to a level it projects would meet the revenue target. Such a change, though, would require legislative approval.

Tightening the Fair Share rules is one of several proposals Gov. Patrick presented last week to state legislators to generate more than $100 million in new revenues to pay for increasing costs of subsidizing health insurance coverage for the uninsured. Those costs are projected at $869 million for fiscal 2009, up from $647 million in fiscal 2008. Other proposals would impose new assessments on health insurers and hospitals.

Those increased contributions—which Gov. Patrick described in remarks he made at a budget signing ceremony as “modest”—from employers, insurers and providers are in the “same spirit of shared responsibility” in which premiums and copayments for enrollees in the state-subsidized health insurance program were boosted. Business groups, though, say the changes are anything but modest.

While slightly more than 1% of employers with at least 11 full-time employees paid the assessment during the first year the assessment was in effect, business lobbyists say that percentage will climb, though it isn’t known by exactly how much.

“Some employers are really going to be hit,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

The industries most likely to be affected are retailers and restaurants, which because of high turnover often impose waiting periods well in excess of three months for new employees, said J.D. Piro, an attorney with Hewitt Associates Inc. in Norwalk, Conn.

Some business groups view the Fair Share test tightening as a betrayal, in which the rules are being changed in midstream.

“This is bait and switch,” said Bill Vernon, state director of the National Federation of Independent Business in Boston. “We’re stunned that this would be proposed a couple of years down the road.”

Other business leaders say employers have done more than their fair share in helping Massachusetts achieve its goal of near-universal health insurance coverage.

For example, of the roughly 350,000 individuals who were uninsured prior to law’s enactment and now have coverage, about 85,000 are in employer-sponsored plans. That increase, observers say, is largely the result of employees opting for coverage to avoid a state penalty as high as $900. The penalty is imposed on individuals who are not enrolled in a health plan.

“Employers definitely are doing their part,” said Richard Lord, president and CEO of the Associated Industries of Massachusetts in Boston.

While employers are upset about the proposals, they will continue to support the health care reform law, some state observers say.

“Business understands that the law is a good thing for Massachusetts,” said Phil Edmundson, chief executive officer of Boston-based William Gallagher Associates Insurance Brokers Inc.

State officials attribute revenue shortfalls to underestimating the number of lower-income uninsured. As a result, more people than originally projected received state-subsidized coverage. For example, about 175,000 state residents currently receive coverage through Commonwealth Care, the state-subsidized program for the low-income uninsured. That compares with earlier projections of about 136,000 by Sept. 30. Gov. Patrick’s proposed budget for fiscal 2009 anticipates enrollment hitting 225,000, and some state observers say the number could go even higher.

“If you offer a financial incentive for people to get coverage, don’t be surprised if they take you up on it,” Hewitt’s Mr. Piro said.

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THE PRICE OF REFORM

How Massachusetts employers would pay more under Gov. Deval Patrick’s proposal:

To avoid a $295 per employee assessment, employers would have to enroll at least 25% of full-time employees in their health plans and pay at least 33% of premiums for individual coverage.

If revenue from Fair Share assessments does not generate $38 million a year, the per employee assessment would be increased.

Fair Share assessments would be paid quarterly.

Maine taxes for health care step closer to repeal

Posted on July 16, 2008

Posted On: July 16, 2008 10:22 AM CST
Jerry Geisel
AUGUSTA, Maine—A business coalition organized to fight recent tax increases intended to support Maine’s struggling program to provide state-subsidized health care coverage says it has gathered nearly double the number of signatures needed to put a repeal measure on the November ballot.

The Fed Up with Taxes coalition delivered more than 90,000 signatures Tuesday to the Maine secretary of state, far more than the roughly 55,000 required to put the repeal initiative on the ballot. The secretary of state has until mid-August to review and validate the signatures.

“Voters from all over the state eagerly signed our petitions because Maine families are struggling in this difficult economy. This is absolutely the worst time to be raising taxes,” Newell Augur, the coalition’s chairman and head of the Maine Beverage Assn. in Portland, said in a statement.

The new taxes replaced a controversial assessment on health insurers that hasn’t come close to providing the revenue needed to fund DirigoChoice, the state-subsidized program offered to small employers and individuals.

The taxes included a first-ever Maine tax on soft drinks, a doubling of existing levies on beer and wine, and a 1.8% tax on health care claims paid by insurers and third-party claims administrators.

State officials earlier said the new taxes would generate roughly double the revenue of the previous assessment on insurers, while the amount collected would be more predictable. The previous assessment had been linked to savings achieved by insurers, which were expected to save money since providers were projected to shift less uncompensated health care costs to insured patients as more people had coverage.

But fewer than 13,000 people now have coverage through DirigoChoice, a fraction of initial state enrollment projections.

If voters approve the tax repeal, the assessment on insurers would be restored.

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