The Effects of ObamaCare

	Contact John Mauldin Print Version Volume 6 - Issue 46 November 08, 2010 The Effects of ObamaCare By Lisa Cummings What will be the effects of ObamaCare? My friend Lisa Cummings, an expert on employee benefits (she was one of the first employees at Dell and was a senior exec at Wal-Mart), has analyzed the bill; and from what she tells me it appears to be one big pile of unintended consequences and costs. It will be far cheaper for an employer to simply pay the $2,000 fine and pay for the employee to enroll in the government health exchange program, which of course puts more cost on the taxpayer. Behind the curtain of wonderful and laudable objectives is a mountain of regulations and costs. But that is what is coming. I asked Lisa to give me a written report on just the more important changes and costs, and that is your Outside the Box reading today. Lisa Cummings is an expert global benefits consultant with an emphasis on advising Fortune 500 companies of best practices regarding plan design and legal compliance. She is an ERISA attorney by training and has a rich experience with health and retirement plans in the US and around the world. For more information, you may contact her at lcummings@benefitsconnection.co. Many thanks, Lisa, for taking the time out of your busy schedule. Your glad to be back in his own bed analyst, John Mauldin, Editor Outside the Box The Effects of ObamaCare By Lisa Cummings It Does What? Have you ever seen a television commercial touting diet pills, weight loss in a bottle, and bought them, thinking, “The ad seems reasonable, with a nice actor I’ve seen,” and then get the bottle home and read the side effects? Although you were promised a return to the slim, beautiful you, the side effects on the bottle warn of “potential for heart attack, broken bones, upper respiratory infection, edema, loss of balance, and death.” Talk about the cure being worse than the condition! Health-care reform as signed into law is a prime example of the cure prescribed by Dr. Obama being worse than our current condition of rising health-care costs and uninsured Americans. We all know that health care in America is on course to change significantly with the passage of the Patient Protection and Affordable Care Act (“the Act”) on March 23, 2010. Most of you may think of this as “health-care reform,” though some refer to it as “ObamaCare.” You may have heard about what ObamaCare was intended to do, but have you heard about the unintended outcomes of this massive restructuring of US health care? As of the date of this writing, over 55% of Americans would like to have ObamaCare repealed,[1] and that’s based on what they know about it. Let’s also consider the challenges that aren’t commonly known. Intended Outcomes of Health Care Reform: Just What Dr. Obama Ordered Coverage for all with capped premiums First, we’ll begin with a recap of what the President and Congress intended to enact: ObamaCare’s premise is that all Americans should have health insurance and shouldn’t have to pay more than a set amount for their coverage. ObamaCare requires that an employee whose “household income” is less than “four times the Federal Poverty Level” (currently $73,240 for a family a four) pays no more 9.5% of his household income for employer-sponsored health insurance coverage. This is like car insurance being required by a state and then limiting the amount the driver has to pay for monthly premiums, basing the cost on an ability to pay. General provisions of ObamaCare, generally starting in 2014 You can’t be turned down for health insurance coverage. You can cover your children on your health plan up to age 26 (starts in 2011). If you can’t afford health insurance, you will receive assistance from the government to purchase it. You can purchase health insurance more easily. Your personal health records will be digitized, resulting in cost savings. On the surface, these items sound wholesome, kind of like motherhood and apple pie. However, some of the additional items required by ObamaCare include hundreds of requirements for individuals, for businesses, for insurance companies, for health care providers such as doctors and hospitals, and for government entities. To get a visual idea of the complexity surrounding the new health-care requirements, you can peruse the following chart prepared by the Joint Economic Congressional Committee, which outlines the bureaucratic Frankenstein that is being created. I’m printing the chart in a size that is too small to read here, just to give you the idea. You can download the chart itself by clicking here. Side Effects of Obamacare: Beware, the cure may be worse than the current condition. The Health Reform Act and accompanying Reconciliation Act encompass over 1000 pages. Since their passage in March, dozens of additional interim final regulations, guidelines, and memos have been written, and in addition direct conversations from the HHS Secretary have now been made into law. Here are some of the more audacious requirements of ObamaCare, along with the year they become effective: • Moves 18 million people onto Medicaid programs. Remainder of uninsured will go to state health exchanges (2014).[2] To put ObamaCare in context, keep in mind nearly 60% of Americans receive their health care from their employer. 19% of Americans have no health coverage. [3] Once ObamaCare is in force in 2014, the uninsured will be redistributed: a third will go to Medicaid, 28% will go to Government health exchanges, and the remaining 41% will continue to be uninsured. [4] • Adds new taxation on capital gains, including a new 3.8% tax on the sale of your home (2013) • Mandates auto-enrollment in long-term care at a cost of $123 per month for everyone (the CLASS Act), requiring an affirmative opt-out if you don’t wish to be covered (as soon as HHS can determine how to implement).[5] This section is so outrageous, Sen. Kent Conrad (D-ND), Senate Budget Committee chairman, called it “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”[6] (Yes, Sen. Conrad voted for ObamaCare and the self-described Ponzi scheme.) • Adds a medical device tax of 2.9% on everything from CT scanners to surgical scissors, to be passed along to health-care consumers (2013)[7] • Enhances the Nanny State: restaurant chains will have to post caloric content next to prices on the menu, and nutritional information must be posted on the outside of all vending machines (2011).[8] • Triggers loss of insurance coverage by large numbers of lower-paid employees, starting in 2011 A large number of “mini-med” plans, typically limited-coverage plans for employer groups in the retail and fast-food industries, and providing child-only coverage, will not be able to meet federal regulations on the minimum annual dollar limit. The minimum annual limit for benefits covered by the health plan is $750,000 in 2011. HHS has so far granted waivers for more than 30 employers, including such diverse employers as McDonalds, Jack in the Box, the United Federation of Teachers Welfare Fund, and a New York teacher’s union, to allow coverage to continue for 2011.[9] What about the other 1,000,000 individuals who were previously covered under these plans? Does that mean they will no longer have coverage starting January 1, 2011? • Subjects college student medical plans to possible elimination since they will not meet the “Medical Loss Ratio” requirements recently approved by the National Association of Insurance Commissioners.[10] The Pork Included in ObamaCare The Cornhusker kickback: the federal government picks up Nebraska’s Medicaid expansion bill forever.[11] The Louisiana Purchase: Louisiana receives $300 million for increasing Medicare subsidies.[12] $100 million special funding for a hospital in Connecticut[13] Funding of asbestos clean-up in Montana[14] The Gator Aid, by which three counties in south Florida are exempted from Medicare Advantage cuts[15] Unintended Consequences of Health Care Reform “We have to pass the bill so that you can find out what is in it.” – House Speaker Nancy Pelosi, March 9, 2010 Well, now we know. Here are some of the outcomes of legislation that was passed without having been read: Employers may decide it is cheaper to drop health care plans altogether and instead pay the $2,000 penalty per employee. Large employers typically pay in excess of $9800 per employee for health plan coverage today.[16] After the new requirements for health-care reform are added to the already large costs, they may decide to split the cost savings with the employee and reinvest the difference in their businesses, whether in the US or in other countries where perhaps a higher return on investment can be achieved. Employers may decide to limit the number of full-time employees, favoring part-time employees instead. Employer penalties only apply to full-time employees working more than 30 hours a week. Would you try to move employees to less than 30 hours a week to save taxes? Remember, employers today provide 59% of all Americans with their health insurance. The Congressional Budget Office estimates that today over 150 million Americans have their health insurance with their private employer. If employers decide to get out of the health insurance game, then the majority of Americans will have to look to the government health exchanges to purchase their health insurance. When 2014 arrives, every employer with a health-care plan will need to make the same calculation: Determine the per-employee cost implications of providing a health-care plan and compare them to the benefit of dropping the plan, paying the penalty, and reimbursing the employee for his employee-mandate fee. The employer might also decide to share the cost savings with the employee to help reimburse the employee for his premium cost to purchase government-exchange health insurance. Aside from the hard-dollar cost savings, the employer will also need to analyze whether providing a health-care plan can help the employer attract and retain highly prized employees. The logical conclusion is that employers who hire positions in great demand will be more likely to keep employer health-care plans, while employers who hire less unique skills will more likely terminate their health-care plans, pay the penalties, and redeploy the savings where there is a higher return on investment. Healthy people will pay more for insurance coverage. Instead of individuals being able to choose the coverage they need, they will be required to purchase only government-approved benefit choices. Younger individuals will be required to subsidize older individuals, who will be required to have preventive-care screenings, with an expected increase of 17% in premiums, or up to $500.[17] Health-care cost curve bends in the wrong direction by increasing overall health spending by $222 billion between now and 2019. [18] Neglects Medicare funding, which is already due to become insolvent in 2016 Retirees in Medicare Advantage plans may lose their coverage due to decreased government funding. Starting in 2011, the government reimbursement will be frozen at 2010 levels. Health providers will be reimbursed less for Medicare patients, causing providers to reduce the number of Medicare patients they treat. This is an outcome of the reconciliation act that followed the passage of ObamaCare, migrating funding away from Medicare providers to pay for part of the ObamaCare provisions. Consolidation of health markets: from small community hospitals, to doctors, regional hospitals, and insurance companies[19]. The consolidation of health-care providers will lead to increased costs for hospitals and doctors, simply because there is a reduced supply of providers. If uninsured individuals choose to pay the tax instead of signing up for insurance through a government exchange, the government-exchange premiums will become so expensive, individuals won’t be able to afford to buy insurance. Just look at the outcome of the Massachusetts mandated health-care coverage for an idea of how this will turn out. Child-only policies will stop being issued due to the required annual benefit levels being increased along with the new requirements that at least 85% of all insurance premiums be used on health-care providers. This means that higher-cost child-only coverage plans will fail to meet the limits and must be discontinued. This will cause the children to lose their own cheap coverage and instead either have to move to their parents’ employer plans or access care through the government exchanges. Employer-sponsored retiree medical plans may be dropped due to repeal of the Medicare part D pharmacy subsidy. Although the subsidy isn’t cancelled until 2013, the SEC requires accounting recognition of any changes as soon as they are known. This provision is what triggered the earnings impact announcements by Caterpillar, Deere, and AT&T within a week of ObamaCare being signed into law. Over 43% of employers with retiree plans indicated they would likely eliminate retiree medical programs due to the additional requirements under ObamaCare.[20] Employers’ Decision to Keep or End Retiree Medical Plans It isn’t going to be easy or cheap to be ObamaCare-compliant. All of us will be affected in numerous ways by ObamaCare. Below is a listing of major groups that will be impacted. Overall Economy[21] Some 670,000 jobs could be eliminated due to the additional $760 billion in taxes, penalties, and fees on investors and businesses. The federal deficit will be increased up to an additional $115 billion over original projections.[22] By 2020, ObamaCare will: Increase the interest on the national debt by $23.1 billion per year Raise the national debt by more than $753 billion Increase annual budget deficits by an average of $75 billion.[23] Employers Short-term: Costs are increasing for employer-sponsored plans. Health-care premiums for 2011 are being increased by an average of 8.8%, and a 1-2% increase is due to the mandated 2011 changes of covering all dependents to age 26 and eliminating certain lifetime and annual limits.[24] Starting in 2014: Employers who provide health-care plans for their employees will be required to ensure that the level of health-care benefits they provide their employees meet new government standards or face fines and penalties equal to $2,000 per year for each full-time employee. Even then, if their employees would have to pay more than 9.5% of their adjusted gross income for the health plan, or if the employee chooses to purchase from a government exchange, the employer will still have to pay a $2,000 penalty.[25] Employers who provide health coverage will be required to provide an annual report to HHS that lists each individual eligible to enroll in “minimum essential coverage,” the length of waiting period, number of months that coverage was available, monthly premium for lowest-cost option, plan’s share of covered health-care expenses, number of full-time employees, number of months covered, and any other requirements that may be identified by HHS.[26] If an employer doesn’t provide a health-care plan for employees and has more than 50 full-time employees (who work more than 30 hours per week), the employer must pay a penalty equal to $2,000 per full-time employee per year. [27] Individuals Starting in 2014 you are required to have coverage, either from your employer or from a government-sponsored health-care exchange. If you don’t purchase it, the IRS will assess you with tax of $695 per year per family member (capped at three) or 2.5% of your income, whichever is greater.[28] Doctors[29] With the increase of covered patients, there will be a shortage of 150,000 doctors.[30] Doctors are already overworked. Patients will have to wait longer to can get an appointment to see the doctor. Starting in 2011, Medicare reimbursements will be reduced. Medicare already reimburses doctors at an amount equal to only 81% of private payments. Between 18 to 20 million new Medicaid patients will flow to doctors. Medicaid coverage pays doctors 56% of the private payment amounts. Federal funding will pay for parity to Medicare for 2013 and 2014, and then it is up to the states to figure out how to pay the Medicaid doctors. Doctors will face more federal agencies, boards, and commissions, including the Independent Payment Advisory Board in 2012, a nonprofit Outcomes Research Institute, and the Physician Quality Reporting Initiative. 59% of doctors think the quality of medicine will decline in the next five years and 79% are less optimistic about the future of medicine. 69% are thinking about dropping out of government health programs, 53% would consider opting out of treating insurance-covered patients, and 45% have considered leaving the profession altogether. [31] States[32] ObamaCare mandates the increase of Medicaid participation by 18-20 million more people, but provides states with limited support funding. States are required to establish exchanges by 2013, and if they decline to establish exchanges, the Secretary of HHS runs the exchanges. Here’s a question for you: if HHS runs a state’s exchange, for whom do the state insurance commissioners work, the people who elected them or the federal government? The states will first have to figure out how much money is required to pay for this – and guess what, it won’t be cheap. Texas’ Medicaid costs would increase by $4.5 Billion for 2014-2019 alone.[33] These new state mandates explain why over 21 states have filed suit in federal court to declare parts of ObamaCare unconstitutional, as infringing on the Tenth Amendment rights afforded to states.[34] [35] Retirees[36] Medicare Advantage plans, which cover nearly 25% of Medicare seniors, will be cut in half over the next ten years due to ObamaCare freezing payment to the plans. Some $416.5 billion in “savings” from Medicare (actually, cuts in Medicare payments to doctors and hospitals) is being shifted from shoring up Medicare funding to paying for ObamaCare.[37] The donut hole in Medicare Part D is being reduced with a $250 payment in 2010 and drug companies being required to provide a 50% discount on brand-name prescriptions filled in the hole. The Medicare program will be adding 77 million baby boomers starting in 2011. Finding a doctor will become even more difficult with the already existing doctor shortage and another 18-20 million individuals receiving Medicaid coverage in 2014. Medicare Part A providers – hospitals • will receive reduced funding. By 2020 15% are slated to become unprofitable, according to the Center for Medicare and Medicaid Services Actuary. Seniors will pay higher taxes as well. Taxpayers[38] Three major tax increases: • New 40% excise tax on health insurance plans, known as the “Cadillac Tax” if a health plan is valued in excess of $10,200 for employee-only coverage [Can someone show me where the hell I can get a policy for less than $10,200?? Seriously. – JM] and $27,500 for family coverage. 43% of all plans are expected to incur this tax by 2018, when it becomes effective.[39] • Increase in hospital insurance portion of payroll tax: Medicare tax will be increased from 1.45% to 2.35% for families making more than $250,000. The new rate will be 3.8%, effective in 2013. Note: the health insurance rate increase is not being used to fund Social Security and Medicare, but rather a separate entitlement.[40] • Payroll taxes on investment. A new 3.8% health insurance tax applies to investment income, including capital gains, dividends, rents, royalties, and yes, even the sale of your home.[41] Numerous additional taxes:[42] • Limit on itemized deductions for health care • Increased taxes on prescription drugs • Increased medical device taxes • Additional taxes on insurers [43] What’s Next? Regulatory interpretations are piling up, along with regulatory burdens. Since ObamaCare and the Reconciliation Act were signed into law in March, there have been no fewer than twelve sets of additional regulations, guidelines, or notices that have been issued to lend clarification and at the same time add additional regulatory requirements. ObamaCare establishes more than 159 boards, panels, and programs, all of which will add to bureaucratic red tape. Employers face immediate plan changes that must be implemented for the upcoming plan year. All plans (except retiree-only plans) have to allow children of covered employees to be added up to age 26. Additionally, the lifetime maximum benefit levels have to be eliminated. These costs alone will add 1-2% to 2011 health-care costs for employers.[44] Longer-term, employers will need to consider whether they will cancel health-care plans in 2014, when exchanges become effective. Also, employers will need to determine whether they will eliminate retiree medical coverage due to elimination of the pharmacy subsidy in 2013. [1] Rasmussen Poll, October 11, 2010 [2] Heritage Foundation, May 11, 2010,Webmemo #2895, Impact on Doctors [3] Employee Benefits Research Institute No. 347, Sources of Health Insurance and Characteristics of the Uninsured, September 2010. [4] http://www.heritage.org/research/projects/obamacare/obamacare-in-pictures [5] Section sec. 8002(a)(1) of P.L. 11-148; Letter from Douglas Elmendorf, director, Congressional Budget Office, to House speaker Nancy Pelosi, March 20, 2010. [6] Lori Montgomery, “Proposed Long-Term Insurance Program Raises Questions,” Washington Post, October 27, 2009. [7] Section 9009 of P.L. 111-148 [8] Section 4205(b) of P.L. 111-148 [9] http://www.hhs.gov/ociio/ regulations/patient/appapps.html. [10] NAIC.org, October 21, 2010, “Regulation for Medical Loss Ratio per Section 2718(b) [11] Section 10201(C)(3) of P.L. 111-148 [12] Section 2006 of P.L. 111-148 [13] Section 10502 of P.L. 111-148 [14] Section 10323 of P.L. 111-148 [15] Section 3201(c)(3)(B) of P.L. 111-148, as amended in P.L. 111-152 [16] Aon Hewitt, September 27, 2010 [17] Carla Johnson, “Health Premiums Could Rise 17 Percent for Young Adults,” Associated Press, March 29, 2010. [18] National Health Spending Projections: The Estimated Impact Of Reform Through 2019; Sisko et al. Health Affairs.2010; 29: 1933-1941 [19] Wall Street Journal, October 26, 2010, “Big Insurance, Big Medicine. [20] Towers Watson Flash Survey, http://towerswatson.com/health-care-reform [21] Heritage Foundation, September 22, 2010, Webmemo #3022, Impact on the Econ [22] Ibid. [23] HIS/Global Insights macroeconomic model, using HeritageFoundation.org assumptions [24] Aon Hewitt “Rate of Increase Rises Significantly as Companies Struggle to Keep up with Rapidly Evolving Health Care Landscape” September 27, 2010 [25] Section 1513(a) as amended by Section 10106 (e-g) of P.L. 111-148 and Section 1003 of P.L. 111-152 [26] Section 1514 of P.L. 111-148 [27] Section 1513(a) as amended by Section 10106 (e-g) of P.L. 111-148 and Section 1003 of P.L. 111-152 [28] Section 1501(b) as amended by Section 10106(b) of P.L. 111-148 and by Section 1002 of P.L. 111-152 [29] Heritage Foundation, May 11, 2010,Webmemo #2895, Impact on Doctors [30] Susan Sataline and Shirley Wang, “Medical Schools Can’t Keep Up,” Wall Street Journal, April 12, 2010. [31] Terry Jones, Investors Business Daily, September 15, 2010 [32] Heritage Foundation, May 3, 2010, #2408, Impact on States [33] Cato Institute, Michael Tanner, Bad Medicine, Page 8 and Table 1 [34] Heritage Foundation, June 21, 2010, #2424, Ongoing ObamaCare Concerns [35] http://www.heritage.org/research/projects/obamacare/obamacare-in-pictures [36] Heritage Foundation, May 20, 2010, #3022, Impact on Seniors [37] Letter from Douglas Elmendorf, Director, Congressional Budget Office, to House speaker Nancy Pelosi, March 20, 2010. [38] Heritage Foundation, April 14, 2010, #2402, Impact on Taxpayers [39] “Cadillac Health Plan Tax to Penalize Majority of Employers by 2018,” Towers Watson, press release, May 19, 2010. [40] Section 9015, of P.L. 111-148 [41] Section 1411, of P.L. 111-152 [42] Cato Institute, Michael Tanner, Bad Medicine, Page 21 [43] Ibid. [44] Aon Hewitt, September 27, 2010 John F. Mauldinjohnmauldin@investorsinsight.com You are currently subscribed as rmccallister@cox.net. To unsubscribe, go here. Reproductions. If you would like to reproduce any of John Mauldin's E-Letters or commentary, you must include the source of your quote and the following email address: JohnMauldin@InvestorsInsight.com. Please write to Reproductions@InvestorsInsight.com and inform us of any reproductions including where and when the copy will be reproduced. Note: John Mauldin is the President of Millennium Wave Advisors, LLC (MWA), which is an investment advisory firm registered with multiple states. John Mauldin is a registered representative of Millennium Wave Securities, LLC, (MWS), an FINRA registered broker-dealer. MWS is also a Commodity Pool Operator (CPO) and a Commodity Trading Advisor (CTA) registered with the CFTC, as well as an Introducing Broker (IB). Millennium Wave Investments is a dba of MWA LLC and MWS LLC. Millennium Wave Investments cooperates in the consulting on and marketing of private investment offerings with other independent firms such as Altegris Investments; Absolute Return Partners, LLP; Plexus Asset Management; Fynn Capital; and Nicola Wealth Management. Funds recommended by Mauldin may pay a portion of their fees to these independent firms, who will share 1/3 of those fees with MWS and thus with Mauldin. Any views expressed herein are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest with any CTA, fund, or program mentioned here or elsewhere. Before seeking any advisor's services or making an investment in a fund, investors must read and examine thoroughly the respective disclosure document or offering memorandum. Since these firms and Mauldin receive fees from the funds they recommend/market, they only recommend/market products with which they have been able to negotiate fee arrangements. 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WHEN CONSIDERING ALTERNATIVE INVESTMENTS, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER. Communications from InvestorsInsight are intended solely for informational purposes. Statements made by various authors, advertisers, sponsors and other contributors do not necessarily reflect the opinions of InvestorsInsight, and should not be construed as an endorsement by InvestorsInsight, either expressed or implied. InvestorsInsight and Business Marketing Group may share in certain fees or income resulting from this publication. InvestorsInsight is not responsible for typographic errors or other inaccuracies in the content. We believe the information contained herein to be accurate and reliable. However, errors may occasionally occur. Therefore, all information and materials are provided "AS IS" without any warranty of any kind. Past results are not indicative of future results. We encourage readers to review our complete legal and privacy statements on our home page. InvestorsInsight Publishing, Inc. -- 14900 Landmark Blvd #350, Dallas, Texas 75254 © InvestorsInsight Publishing, Inc. 2010 ALL RIGHTS RESERVED

"People with goals succeed because they know where they're going."

"People with goals succeed because they know where they're going."
— Earl Nightingale: Author, The Strangest Secret, Lead the Field.

Nothing New Under the Sun

 

How do most people and most companies reduces costs as they go up?


Increase out of pocket expenses by changing plans which reduce the premium costs.  Its like the fram filter commercial, you can pay me know or you can pay may latter.  Truth be said is cost are and will continue to go up.


Our place as Benefits Consultants is to assit in mitigating those increases in the least painful way.

Nightingale Conant: World Leader in Success, Personal Development and Motivation.

Nightingale Conant: World Leader in Success, Personal Development and Motivation.

Pancreatic Cancer is Hard to Detect Early

Johns Hopkins researchers have discovered pancreatic cancer grows very slowly. Early detection could prevent the disease  from spreading, but is extremely hard to find in its early stages.  Patients diagnosed with pancreatic cancer are usually in advanced stages say the researchers, who have now discovered there is a window of opportunity to intervene and stop the disease from metastasizing to other organs.

Christine Iacobuzio-Donahue, M.D., Ph.D., associate professor of pathology and oncology at Hopkins’ Sol Goldman Pancreatic Cancer Research Center explains most patients are diagnosed late, but “there is potentially a very broad window for screening”, something that the researchers say is a surprise.
Current screening methods for pancreatic cancer fail to pick up tumors that might take decades to grow. The researchers suggest lives could be saved by screening for cancer of the pancreas using the same types of methods used for breast and colon cancer screening.

The researchers found that after a pancreatic cancer cell develops it takes almost 7 years to progress to the size of a plum with the potential of at least one cell to spread to other organs. When the disease metastasizes most patients die within 2.5 years.  The findings that pancreatic cancer is grows very slowly contradicts what was previously known about the disease. Lack of symptoms makes it impossible to detect pancreatic cancer when it is most treatable.

It takes at least a decade for a mutated pancreatic cell to turn into cancer. Once that happens, it takes another 7 years before the disease would start to spread, using conservative estimates.
Iacobuzio-Donahue suggests the possibility of using a tiny camera attached to a thin, long tube to perform endoscopy that could detect pancreatic cancer sooner. Just like colonoscopy screening that helps prevent cancer and recommended beginning at age 50, the Hopkins researchers hope to develop a test to find the disease in its early stages.

The slow growth of pancreatic cancer was discovered by the scientists through gene sequencing of cancer cells among patients who died; analyzed within 6 hours of death. They discovered gene mutations were present years before the cancer spread. The findings that pancreatic cancer grows slowly can save lives. The National Cancer Institute estimates 36,800 people will die the disease this year. The five year survival rate when the disease spreads to other organs is a mere 1.9 percent. Currenty, "pretty much everybody" is diagnosed too late, according to Dr. Iacobuzio-Donahue.

Johns Hopkins News

Council for Disability Awareness (CDA) Study Shows Recession Risks Make Disability Planning More Important

A recent study by the Council on Disability Awareness (CDA) indicates that more than half of all Americans have never discussed with anyone how they would continue paying their bills if they became temporarily disabled. The good news is that it is possible for employers to help employees protect themselves from the financial impact of disability by planning ahead. "While there may not be much people can do about the housing crisis or the recession - or how either of those factors will affect the economy - people can do something about the threat of disability and its impact on personal finances," says Barry Lundquist, CDA president. The recent Worker Disability Planning and Preparedness Study sponsored by the CDA reveals Americans’ knowledge of and attitudes about disability: More than half (56%) have never discussed disability planning. Most workers rate their earning ability as the most important factor in their long-term financial security, but two out of three don't even think about disability when discussing financial planning. Most believe they could rely on a patchwork of income sources, including help from family and friends, retirement savings, home equity loans and credit cards if they were out of work for a year. 62% would count on a spouse's or partner's income for support, despite the fact that the majority of American households - even those that are two-income - live paycheck to paycheck and have a negative savings rate. According to the survey, Americans are also confused about employer-sponsored disability programs and the Social Security Disability Insurance program: Only half of workers who would receive employer-sponsored sick leave benefits feel they understand them very well. Of those whose employers offer a long-term disability program, just 28% said they understood the program. Nearly 20% of survey respondents weren't even sure if their employers offered such a program. One in three workers surveyed do not understand or is not aware of Social Security Disability Insurance, a key disability program for 150 million workers across America. The survey underscores the need for workers to incorporate the financial risks associated with disability into their financial planning mindset and actions. "The ability to earn a living is the most important driver of financial security for the majority of people,” says Lundquist. “Broader awareness and education about available disability programs is a critical starting point to helping more workers assume responsibility for their long-term financial security."  more informtaion click here!

Preventive Health Programs Work

Preventive medicine can reduce health risks in just one year, according to a study published in the Journal Population Health Management. After one year, 42% of patients in a preventive medicine program faced fewer health risks. Sixty-four percent of high-risk patients lowered their risk status. Eighty-seven percent of low risk patients maintained their health status. The biggest declines in these risks were in: blood pressure (43%), fasting blood sugar (31%), stress (25%), alcohol consumption (24%), and cholesterol (23%).
Ronald Loeppke, M.D., M.P.H., vice-chairman of U.S. Preventive Medicine and lead author said, “Employers are beginning to realize they need to invest in the health of their employees to drive their business success and continue to offer sustainable employee healthcare benefits programs.” For more information, visit www.USPreventiveMedicine.com.

Disease Management: Worth the Investment?

Disease management has grown into an estimated $2.5 billion industry. But lately it’s been taking some hits. What exactly is disease management, and is it effective in controlling health care...

read more here Volume 8 • Number 10 

Employee Benefits ReportOctober
2010

Annuities Mitigate Retirement Risks

The percentage of households that are at risk for financial issues during retirement jumps from 51% to 60% for households that live off of the interest from their assets instead of purchasing an inflation-indexed annuity. The study, by the Center for Retirement Research at Boston College, suggests that having annuities provides more monthly income in retirement than simply drawing down assets or living off the interest on assets.

The study, which was sponsored by Nationwide Financial, examined two alternatives to annuitization. In the first alternative, households drew down their assets at 4% per year, which is a common strategy suggested by financial planners and investment professionals. In the second scenario, households lived off the interest on their accumulated wealth (estimated at 1.9% annually). The Index uses the conservative assumptions that people work to age 65, get income from reverse mortgages, and annuitize all of their financial assets.

Center Director Alicia H. Munnell said, “Purchasing an annuity is one way that households can ensure that they don’t outlive their assets, but the reality is that most people do not choose this option.”
People with a high net worth are most affected by not annuitizing their assets. The percentage at risk increased from 42% to 47% for those who drew down their assets at 4% a year and increased from 42% to 57% for those who lived off the interest of their assets. Higher income households typically rely on the return on their assets while lower income households typically rely on Social Security for most of their retirement income.

Brad Davis, vice president of retirement income solutions for Nationwide Financial Services said, “The latest analysis of the NRRI demonstrates the important role that annuities can play in helping people plan for retirement. It also highlights an opportunity for advisors to help educate clients about what options are available as they develop their retirement income strategy.” To get the full report, visit http://crr.bc.edu.

One of the difficulties in National Health Care Reform

Key findings released today by United Benefit Advisors (UBA) from the UBA 2010 Health Plan Survey indicate that significant differences in state-by-state average annual costs (AAC) for employee health plans may have implications regarding the future implementation of health insurance exchanges and/or co-operatives.
The survey reveals that while Alaska has the highest average annual cost (AAC) per employee at $10,881, the only other states with an AAC per employee in excess of $10,000 are all located in the Northeast:


Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/10/26/prwebprweb4705154.DTL#ixzz13WYIFJBV

Case of the week

A LTC case - a broker has a client that he wrote a LTC policy on 13 years ago. He wrote a very high benefit - long benefit period. Back then - it was fairly inexpensive. The client went through 2 rate increases. Her premiums went up by 40%! She just was okayed for benefits. Cognitively - her first 6 months will pay out an amount almost equal to her total premiums!!!!!

Senior Newsletter

Information for the changing needs of seniors and their families.

The Sandwich Generation Is Hungry for Financial Guidance

Employees who care for their children as well as elderly relatives have a great appetite for financial advice, according to a MetLife study. People in this difficult position are often referred to as the “Sandwich Generation.” Nearly one in five full-time employees are caring for older relatives and nearly three-quarters of them also have children under 18. Respondents agreed with the following statements:
•    I live paycheck to paycheck: 64% of sandwich-generation employees and 42% of employees caring for kids only.
•    I am very concerned about being able to afford a home: 74% of sandwich-generation employees and 37% of employees caring for kids only.
•    I am very concerned about affording college: 72% of sandwich generation employees and 55% of employees caring for kids only.
•    I am very concerned about having more family time: 72% of sandwich generation employees and 45% of employees caring for kids only and.
•    I am very concerned about my own long-term care needs: 70% of sandwich generation employees and 40% of employers who are caring for kids only.
Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute said, “As the U.S. population ages, the percentage of employees who are caregivers will continue to grow and they will be looking to employers for help and support.”
The study found that 64% of caregivers with children say they worry less about unexpected health and financial issues because of a workplace benefit, demonstrating that employers can provide a real lifeline.
The study also revealed that sandwich generation employees are more likely to seek financial advice. Only 5% don’t consult with anyone about their personal finances, compared to 30% of employees who care for kids only. Employees are using several sources for financial advice:
•    Financial advisers – 45% of Sandwich-Generation employees and 24% of employees caring for just kids.
•    Friends and relatives–39% of Sandwich-Generation employees and 17% of employees caring for just kids.
•    Insurance agents–39% of Sandwich-Generation employees and 7% of employees caring for just kids.
•    Accountants–32% of Sandwich-Generation employees and 9% of employees caring for just kids.
•    Human resources dept. –26% of Sandwich-Generation employees and 10% of employees caring for just kids.
•    Financial publications and websites — 23% of Sandwich-Generation employees of Sandwich-Generation employees and 13% of employees caring for just kids.
For more information, visit www.MatureMarketInstitute.com

CDHP Members Are More Likely to Adopt Healthy Behaviors

Americans who engaged in healthy habits saw their total medical costs go down 15%, an average $358 per person in the first year, according a CIGNA study. Members in consumer driven health plans (CDHPs) are most likely to engage in these healthy habits. The company compared the healthcare claims experience of 897,000 CIGNA members in consumer driven health (CDHP) plans, PPOs, and HMOs. Customers who had healthy behaviors, such as participating in health coaching and disease management programs, substituting generic medications for brand name drugs, and avoiding unnecessary trips to the emergency room, saw their costs go down.
CDHP members are up to 19% more likely to participate in the company’s health coaching program compared to those enrolled in a traditional plan. CDHP members with a chronic illness are 21% more likely to participate in their plan’s disease management program.
CDHP members who have a pharmacy management benefit choose generic equivalent drugs 70% of the time. CDHP members use the emergency 13% less often than do those with HMOs and PPOs. CIGNA Choice Fund members saved an average of $800 when they visited an urgent care facility, their doctor’s office, or convenience clinic instead of the ER.
Use of online information and tools, through myCIGNA.com, increased by 40% when members are enrolled in a CDHP plan. CDHP plan enrollees are five times more likely to complete a health assessment compared to those enrolled in a traditional plan.
CDHP medical costs are 15% lower than traditional plans during the first year, cumulative cost savings rise to 18% in the second year, 21% in the third year, 24% in the fourth year, and 26% in the fifth year.
New CDHP members had the same or better statistical compliance with 400 evidence-based medical best practice measures than their counterparts in traditional plans. Compliance among CDHP members is 14% higher for those enrolled in CDHP plans for multiple years. Moreover, CDHP members sought preventive care 8% to 10% more often than those enrolled in a traditional plan.
The medical cost trend was substantially less for CDHP members with joint disease (21% less), diabetes (8% less), and hypertension (7% less), than for members with any of those diseases who are in traditional CIGNA health plans.
CDHP members with health reimbursement accounts paid $35 less per year out of their own pockets compared to members in traditional plans, demonstrating that savings can be achieved without cost shifting. Also, the percentage of total cost was the same for men and women.
“The evidence is clear. Given the right incentives, the right health improvement programs, useful cost and quality information, and easy-to-understand correspondence, individuals are making rational, wise and successful healthcare decisions. Perhaps because most individuals covered by CIGNA Choice Fund plans are receiving the same or better levels of care for lower cost, 83% of those surveyed report that they are satisfied or very satisfied with the service for their CDHP plans – slightly higher than the 82% satisfaction rate across all of our health plans,” said CIGNA Chief Medical Officer Jeffery Kang, M.D. For more information, visit http://www.cigna.com.

Hospital Costs Keep Climbing

An article by Jordan Rau of Kaiser Health News describes how hospital costs keep climbing amid healthcare reform. State laws have inadvertently given hospitals even more leverage to demand higher prices. California requires HMOs to have networks that offer all major specialties reasonably close to where patients live. Lisa Rubino, president of Molina Healthcare of California, told Kaiser Health News that the law makes it difficult for insurers to drop big hospitals from their networks. “You have to work with them or make a strategic decision to get out of the area because they can dig in,” says Rubino.
Hospital rates in the Bay Area now are among California’s most expensive, propelled upward by prominent hospitals and networks, including Sutter Health, Stanford Hospital & Clinics and John Muir Health, according to private and government data.
Statewide, hospital prices have been rising rapidly for years. For privately insured patients, the cost of a stay has increased annually by an average of 8.5% over the past five years while the cost of an outpatient visit has grown by 9.6% a year, state records reveal.
High prices don’t always equal superior care. Quality measures for some of the Bay Area’s most prestigious hospitals, including Stanford and John Muir, show that in some instances, less expensive competitors perform as well or better in their basic responsibilities, such as avoiding infections and high death rates for patients in intensive care. However, few employers are willing to limit workers to plans with less expensive hospitals. “When we propose alternatives, one of the very first question employers of all sizes ask is what affect the change will have on employees and their dependents,” said Jennifer Walsh, benefit practice leader at Woodruff-Sawyer & Co. in San Francisco, to Kaiser Health News. Many employers, instead, make their workers pay the increased costs.
A few employers are trying to stop the upward march of hospital prices. CalPERS, the state pension fund, estimates it has saved $252 million over five years by kicking some of the costliest hospitals and doctors out of several of its HMO networks in 2005. The savings amounted to about 3.1% of premiums, CalPERS says. For more information, visit www.kff.org.

Healthcare Cost Increases to Continue in 2011

As a number of healthcare reform provisions go into effect for employer plans in 2011, costs for the most popular types of plans are projected to increase by more than 10%, according to a national survey of more than 120 insurers and administrators by Buck Consultants, Xerox Company.

Due to economic uncertainty, insurers may be projecting higher claim costs because employees who remain after layoffs tend to be older and more expensive to insure.” The study measured the projected average annual increase in employer-provided healthcare benefit costs. Insurers providing medical trends for the survey cover a total of approximately 150 million people.
Costs are projected to increase at slightly increased rates from the trends reported in the prior two surveys, as shown in the following chart:

Type of Plan	22nd survey	21st survey	20th survey
PPOs	11.6%	11.1%	11.0%
Point-of-service plans	11.3	10.9	10.2
HMOs	10.6	10.3	11.0
High Deductible Health Plans	11.3	10.3	10.4

“Health insurers anticipate higher claim costs under healthcare reform. Also, due to current economic uncertainty, insurers may be projecting higher claim costs because employees who remain after layoffs tend to be older and more expensive to insure,” said Harvey Sobel, FSA, a Buck principal and consulting actuary who directed the survey.
The trend increase for high deductible health plans (HDHP) is projected to be at or near those for PPO, POS, and HMO plans. “One reason for this is the more pronounced deductible leveraging effect for HDHPs,” said Sobel.
He provided this example:
•    A $10,000 medical bill in a plan with a $100 deductible results in a cost to the insurer of $9,900. If the trend rate is 10%, that medical bill rises to $11,000 and, after the $100 deductible, the cost to the insurer rises to $10,900 – or a 10.1% increase over the previous $9,900 cost.
•    Now consider the same $10,000 medical bill in a high deductible plan with a $1,000 deductible, resulting in a cost to the insurer of $9,000. With the same 10% trend rate, the medical bill again rises to $11,000 and, after the $1,000 deductible, the cost to the insurer rises to $10,000 – or an 11.1% increase over the previous $9,000 cost.
Health insurers reported an average prescription drug trend of 11.3%, up 0.4 points from the 10.9% reported in the prior survey. This is almost twice the 5.8% reported by pharmacy benefit managers (who generally do not take any underwriting risk).
For plans that supplement Medicare, health insurers reported a projected increase of 6.4% excluding prescription drug coverage, up from 5.8% in the prior survey. This lower trend reflects the impact of federal controls on Medicare fees and the lower increases expected in Medicare deductibles and co-pays. For more information, visit .

We can help you lower your heatlh plan costs at: http://www.amsinsure.com/

Guaranteed Issue Medicare Supplement!

Beginning October 15^th for policies with a November 1, 2010 effective date, we are providing guaranteed issue for eligible individuals who switch from an existing Medicare Supplement policy to a new Anthem Medicare Supplement policy with equal or lesser benefits.

That's correct, we will accept new Medicare Supplement members without need for health history or underwriting. Eligible applicants must simply have an existing Medicare Supplement policy with any carrier and apply for an Anthem Medicare Supplement policy of equal or lesser benefits.

This means it's easier than ever for customers to get the plan they need. 

The Guaranteed Issue Medicare Supplement offer will end on December 1, 2011, so to take advantage of this limited time offer, applications must be received on or before that date. Although applicants can switch for effective dates throughout the entire 2011 calendar year, you'll want to get started now to help ensure customers find the right plan!

While online applicants will need to complete the Health History in order to successfully navigate through the online system, as long as they are applying for an Anthem Medicare Supplement policy of equal or lesser benefits, their application will not need underwriting and the Health History information will not be reviewed or considered.

Note: Program applies to all states except NY, CT, ME and NH as these states already have guaranteed issue of Medicare Supplement policies.

Medicare Supplements