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As we move forward with health insurance reform small group plans with under 50 employees may be dropping health plans all together in 2014.  There is still going to be a need and desire for employee benefits. These future employee benefit packages are going to come in the form on non-medical benefits. This would Long Term Disability, Short term disability, Dental, Vision, Life and supplemental policies. Metlife came out with a study on how to keep your employee happy/loyal should you drop the group health plan. The purpose of these type of benefit packages is show the employee that the company is still investing in them.

According to MetLife’s 8th Annual Study of Employee Benefits Trends, 43% of all employees agree that benefits are a very important reason why they remain with their employers. This number drops to 31% for employees at smaller companies.

While healthcare legislation has grabbed the attention of small business owners and brokers, it is important to recognize that health coverage may become less of a differentiator when it comes to hiring, retaining and motivating workers. Non-medical benefits – like dental, disability, life insurance – and voluntary offerings will likely play an increasingly significant role in driving employee loyalty, retention and engagement.

Building a Better Benefits Program Without Breaking the Budget: Five Practical Steps Every Small Business Should Consider outlines steps that small business owners can take to strengthen their non-medical benefits program and optimize benefits value:

1. Manage costs for dental, disability and life insurance while increasing employee loyalty. Many small business owners underestimate the value that their employees place on non-medical benefits like dental, disability and life insurance. While 59% of small business employees say these benefits contribute to their feelings of employer loyalty, only 34% of employers recognize this. The resource outlines ways that employers can control their budgets while still offering benefits that drive loyalty.

2. Deliver budget-conscious wellness programs to aid productivity and help control medical costs. While 61% of larger employers offer wellness programs, just 22% of small companies offer the programs. However, 67% of small businesses believe wellness programs are effective at reducing medical costs. Low-cost options can be implemented by small businesses to help create a culture of health and control long-term costs. Options can include leveraging local health organizations and associations that can help to educate employees on healthy behaviors, or providing convenient access and time off to participate in wellness programs like weight loss, exercise and smoking cessation.

3. Help employees become financially secure and support productivity goals at the same time. About one in five small business employees admits that in the last 12 months, he/she has taken unexpected time off to deal with a financial problem or taken more time than should be spent at work to deal with personal financial issues. In fact, 64% of small businesses strongly believe that employees’ productivity is impacted when they are worried about personal financial matters. Small businesses can consider tapping into local financial institutions and services to provide retirement and/or financial planning options during work hours, or provide access to web-based financial resources for their employees.

4. Simplify benefits communications for greater benefits effectiveness. Only one in five small business employees believes that his/her employers’ benefits communications effectively educate the employee about their benefits programs. The resource gives best practices for benefits communication including using multiple channels, removing jargon, and making messages relevant to key life events or life stages. Employers can also beta test communications to listen and learn from their employees prior to launching a full communication campaign.

5. Leverage small business workplace advantages for increased worker loyalty. The MetLife Study found a loyalty gap in that nearly two-thirds of small businesses say they feel very loyal toward their employees but only about one-third of employees feel their employers have that strong sense of loyalty. Small business employers can take advantage of their company culture to foster an environment where work-life balance, which garners employee loyalty.

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The major health carriers have developed a kind of efficiency rating for doctors and hospitals. These rating systems are directly communicating with the consumer.  The rating systems show price of a procedure and quality of care. So if an insured wants to look up how many times a doctor has performed a certain procedure they can.  They can also view the complication rate from that doctor or facility on that particular procedure.

The American Medical Association is stating that the Rating Measures are wrong up to 25% of the time. This is a very high % if they are correct. The Wall Street Journal confirmed that one of the studies that reported this high % was funded by the AMA.

What we are seeing from the top health insurance carriers is they are developing health plans that want you to use the top rated doctors and facilities. These plans will have less cost to the insured if they use the preferred doctors.

So now it seems that the health care providers are not happy that the insured can now look up the cost of the procedure and the quality of care that doctor provides. All of these types of plans were developed pre health care reform so it will be interesting to see if this type of health care information will continue to be available to the consumer. Recently the HHS launched a site that also gives a quality of care. So at this point there is not just the carriers programs available but now a free service to shop health care.

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With the health care reform we are now going to see plans required to cover preventive care. It should be very interesting to see what kind of impact these coverages have on premium. There is no doubt that these additional coverage will increase premium. The problem right now is no one knows what kind of premium increase these coverages are going to have. From a long term standpoint if everyone takes advantage of these first dollar benefits will it reduce costs? If someone can catch a health problem early then the treatment can be much more effective which could reduce larger treatments down the road. In the short period we all pay more in premium.

“If you have a new health insurance plan or insurance policy beginning on or after September 23, 2010, the following preventive services must be covered without your having to pay a copayment or coinsurance or meet your deductible, when these services are delivered by a network provider.”

Covered Preventive Services for Adults

Abdominal Aortic Aneurysm one-time screening for men of specified ages who have ever smoked
Alcohol Misuse screening and counseling
Aspirin use for men and women of certain ages
Blood Pressure screening for all adults
Cholesterol screening for adults of certain ages or at higher risk
Colorectal Cancer screening for adults over 50
Depression screening for adults
Type 2 Diabetes screening for adults with high blood pressure
Diet counseling for adults at higher risk for chronic disease
HIV screening for all adults at higher risk
Immunization vaccines for adults–doses, recommended ages, and recommended populations vary:
Hepatitis A
Hepatitis B
Herpes Zoster
Human Papillomavirus
Measles, Mumps, Rubella
Tetanus, Diphtheria, Pertussis
Obesity screening and counseling for all adults
Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk
Tobacco Use screening for all adults and cessation interventions for tobacco users
Syphilis screening for all adults at higher risk

Covered Preventive Services for Women, Including Pregnant Women

Anemia screening on a routine basis for pregnant women
Bacteriuria urinary tract or other infection screening for pregnant women
BRCA counseling about genetic testing for women at higher risk
Breast Cancer Mammography screenings every 1 to 2 years for women over 40
Breast Cancer Chemoprevention counseling for women at higher risk
Breast Feeding interventions to support and promote breast feeding
Cervical Cancer screening for sexually active women
Chlamydia Infection screening for younger women and other women at higher risk
Folic Acid supplements for women who may become pregnant
Gonorrhea screening for all women at higher risk
Hepatitis B screening for pregnant women at their first prenatal visit
Osteoporosis screening for women over age 60 depending on risk factors
Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk
Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users
Syphilis screening for all pregnant women or other women at increased risk

Covered Preventive Services for Children

Alcohol and Drug Use assessments for adolescents
Autism screening for children at 18 and 24 months
Behavioral assessments for children of all ages
Cervical Dysplasia screening for sexually active females
Congenital Hypothyroidism screening for newborns
Developmental screening for children under age 3, and surveillance throughout childhood
Dyslipidemia screening for children at higher risk of lipid disorders
Fluoride Chemoprevention supplements for children without fluoride in their water source
Gonorrhea preventive medication for the eyes of all newborns
Hearing screening for all newborns
Height, Weight and Body Mass Index measurements for children
Hematocrit or Hemoglobin screening for children
Hemoglobinopathies or sickle cell screening for newborns
HIV screening for adolescents at higher risk
Immunization vaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary:
Diphtheria, Tetanus, Pertussis
Haemophilus influenzae type b
Hepatitis A
Hepatitis B
Human Papillomavirus
Inactivated Poliovirus
Measles, Mumps, Rubella
Iron supplements for children ages 6 to 12 months at risk for anemia
Lead screening for children at risk of exposure
Medical History for all children throughout development
Obesity screening and counseling
Oral Health risk assessment for young children
Phenylketonuria (PKU) screening for this genetic disorder in newborns
Sexually Transmitted Infection (STI) prevention counseling for adolescents at higher risk
Tuberculin testing for children at higher risk of tuberculosis
Vision screening for all children

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The medical loss ratio (MLR) is the most important aspect of healthcare reform. This interpretation of this law is going to determine if the private industry stays in business. The one positive thing is the NAIC is in charge of interpreting the MLR.

The National Association of Insurance Commissioners was charged by Congress with considerable implementation responsibilities relative to PPACA, and NAHU continues to work with state regulators and the NAIC on a weekly basis on implementation issues of concern to health insurance agents and brokers. The primary issue the NAIC is currently working on of key interest to NAHU and its members is the crafting of definitions relative to what health insurance services will be covered by the PPACA’s minimum loss ratio (MLR) requirements.  

The law gives the NAIC until December 31 to craft the MLR definitions, but HHS has requested that the NAIC complete its work early so that necessary regulations relative to MLR implementation can also be developed. HHS originally asked that the NAIC complete its work by June 1, but the NAIC rejected the timetable, stating it was too tight. Initially, the NAIC said they hoped to get their final work product to HHS by the end of July. However, during a conference call yesterday, Commissioner Steve Ostlund, chair of the NAIC’s Accident and Health Working Group, which is the primary committee within the NAIC working on the definitions, backed away from the end-of-July timeframe. While he was clear that the group will finish its work well in advance of December 31, he refused to specify exactly when they will finish. 

The NAIC committees addressing this issue meet via conference call on at least a weekly basis, and the group is holding an interim meeting on the MLR issue in Washington the week of July 18. The NAIC will also hold their regularly scheduled meeting in Seattle from August 14-17, and NAHU will continue to be an active participant in all of these calls and meetings. Our most recent letter to the NAIC on the MLR issue was sent in conjunction with the entire Agent/Broker Alliance and can be found here.

In addition to the MLR issue, the NAIC is also charged with crafting a sample of the notice all health insurers must send to customers by March 2012 outlining plan benefits and costs. The goal of the NAIC committee is to translate complicated insurance-related terms and benefit information into summaries that can be easily digested by consumers. PPACA required the NAIC committee to be made up of not just insurance regulators, but also interested parties like insurers and consumer groups. NAHU CEO Janet Trautwein was appointed by the NAIC as one of the statutory working group’s formal members to represent the interests of health insurance agents and brokers.

The law gives the NAIC group until March 2011 to craft their sample forms, and the committee has begun meeting on a biweekly basis to accomplish that task. As with the MLR definitions, HHS has requested that the committee finish its work early—by the fall of 2010. NAHU will keep you apprised of the committee’s progress on the sample notices via future editions of Washington Update.  

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The Government website has just released a free service for comparing hospitals services.

This tool provides a listing of Indianapolis hospitals,  and 44 quality measures.

This kind of information is cutting edge when it comes to healthcare. Recently companies like Anthem and Unitedhealthcare have released these kinds of tool to their clients. Now everyone can access this type of information to help make informed healthcare decisions.  This is really important because if  you are going to have a surgery you should have the best Doctor and facility to perform that procedure.

One way to reduce healthcare costs is to use the best care aviable . We all know complications leads to higher costs and personal discomfort.

So if you or a loved one is in need of hospital services take advantage of this tool.

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Last week there was an article in the Indianapolis Star called Do your home work or pay the price.

It was a very interesting article because it address what has been going on in the health care industry locally and the rest of the country. What we are are seeing is hospital groups buying up smaller medical practices.  Most people would not think this has a big impact on their health care but it does.

What is going on is a hospital group buys an outpatient treatment center. That out patient treatment center has negotiated their own network discounts with the local and national PPO plans. So if you go in for a procedure that price could be $1,000. With the negotiated network discount that procedure is discounted down to $356. All of the discounts can be different. What we have seen is most hospitals have higher costs for their procedures.  So for the exact same procedure that is discount to $356 at the out patient center could cost $800 at the hospital.

So what is happening is hospitals groups are buying the smaller facilities and applying their negotiated discounts which are much higher. This is increasing the cost of care which add to higher premiums and higher out of pockets for the consumers.

There is a positive side to the larger health care groups buying up the smaller ones.  These pertains to the rural communities and the local hospital. Most of those hospitals have a hard time operating in the black. So instead of those local centers shutting down a larger group can buy them and operate them. This is important because in that local community those resident do not have any other options.

I was happy to see this article printed by the Indianapolis Star because the general public need to know the cost of care.

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The Grandfathered clause of the new health care reform gave individuals and group plans the right to keep their current plans. To keep that grandfathered status you can not make any changes to the plan. So that means you can not raise the deductible or coinsurance to lower the premium.  From a employer standpoint the group is unable to shift more than a 5% increase onto what the employee pays. Most small groups receive around a 17% rate increase. It will be very difficult of an employer to absorb all of that cost.

So it is going to be almost impossible to keep the coverage that you have.

If your plan is not Grandfathered in then you can expect to have a significant rate increase just for the new health care coverages.

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The McCarran-Ferguson Act that created that antitrust exemption for the health insurance industry has been repealed through the  Patient Protection and Affordable Care Act (PPACA).

This will prevent the health and  medical malpractice insurers from being exempt from antitrust regulation.

An example of how the health industry has had problem is in a case in New York invovling usual and customary rates.  There was a company that was determining what U&C should be and it turned out that company was owned by one of the major insurance companies in that state.  This created a serious conflict of interest and could be viewed as fraud.

The Repeal of this Maccarrn- Ferguson Act could turn out to be good thing for the consumer.

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The White House on Monday will issue new rules that strongly discourage employers from cutting health insurance benefits or increasing the costs of coverage to employees.

The administration said this was just one goal of the legislation, allowing people to “keep their current coverage if they like it.” It acknowledged that some people, especially those who work at smaller businesses, might face significant changes in the terms of their coverage, and it said they should be able to “reap the benefits of additional consumer protections.”

Many employers would benefit from the grandfather status because it would allow them to keep a less costly plan in place. It would cost less because the plan is not covering every aspect of the health care reform.  Once the white house gives an official ruling on the Grandfather Status we will have a much clearing picture but at this point its not looking too good.

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Mark Farrah Associates (MFA), a leading provider of market data and intelligence solutions to the health care industry reported a huge decline in member ship among eight top health insurers: Aetna, CIGNA, Health Care Service Corporation (HCSC), Health Net, Humana, Kaiser Permanente, UnitedHealth Group and WellPoint.

Enrollment declines continued for most of the nation’s leading health insurers through 2009. Between December 2008 and December 2009 top plans saw an aggregate decline of 2.2 million members. Losses continue to be experienced in both the fully-insured and administrative services only (ASO) segments. The difficult economy continues to take a toll in terms of rising medical expenses and declining membership for most plans.

This kind of reduction can lead to price increases to health plans.


When the employees are laid off there is a higher probability that the un healthy employees will elect Cobra. The healthy employee can go out to market and find lower cost alternatives. Now within the group plan we have adverse selection. Without the additional premium to offset the claims this could lead higher cost.

When we add the COBRA subsidy to the equation the group plan is now picking up claims that might not have been there if the Gov was not paying 65% of the premium.  Those claims can have a large impact on loss ratios which can lead to the plan costing more.

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