Health Care Consequences

Douglas Holtz-Eakin

Former CBO Director Douglas Holtz-Eakin comments on Obama Health Reform Costs in this must see video

New report – families paying more for health care

New report – families paying more for health care

The 2010 Milliman Medical Index (MMI)* has been released and shows that American families are paying more for their health care. The total medical cost for a typical family of four is $18,074 in 2010. That’s about $1,300 more than 2009. This is the highest dollar increase seen in the last 10 years since the index was created. While there are many factors to consider, the report reveals that these rising costs are largely driven by increases in the underlying costs of care.  

According to the report, “most of the hospital and physician cost increases identified in this year’s MMI have been driven by average unit cost, not utilization, which frames the effort to control costs.” Average unit cost reflects the negotiated charge for each service, as well as the mix of services delivered. This may be one reason the report suggests that “provider/payor negotiations will be more visible and intense in the reform environment and as regulators put more pressure on the premium rate-setting process.”  

Here are other key findings and observations:  

  • This year, there was an increase in cost trend for inpatient and outpatient facilities, and a decrease in cost trend for physician, pharmacy and other services.
  • Inpatient and outpatient facility services combined represent 48% of total annual medical costs vs. 47% in 2009. 
  • The largest dollar increase this year was for inpatient facility care, which increased by $498.
  • The 2009 to 2010 hospital inpatient annual rate of increase grew from 7.7% to 9.8%; most of the inpatient annual rate of increase is driven by “average unit costs.”
  • Although physician costs are the largest component of the overall health care cost pie, their 2010 annual rate of increase is lower than that of other health care costs components. 
  • There is large variation in health care costs across geographic regions. Costs vary from low to high by more than 35%, with the lower-cost areas generally being in the West and across some parts of the South.
  • At $10,744, the average employer’s share of the cost nationwide for the typical family of four now surpasses $10,000 for the first time. 
  • With reform now in place, some short-term reforms may shift costs further from employees to employers.
  • Despite passage of federal health reform, the underlying drivers of increasing health care costs are not expected to immediately change.   

For more details, take a look at the 2010 Milliman Medical Index.

*The Milliman Medical Index is published annually by the respected global actuarial and consulting firm Milliman Inc. to report total annual medical spending for a typical American family of four covered by an employer-sponsored PPO. The MMI looks at key components of medical costs and charts the changes in these components over time, including cost changes for employers and employees. The MMI also includes results for 14 major American metropolitan areas to demonstrate the variance in medical costs by region.

Worksite Wellness Programs Can Reduce Employer Premiums

Worksite Wellness Programs Can Reduce Employer Premiums

Research supplied by Interactive Health Solutions on May 20 provides a list of the “Healthiest Companies in America.” This group of thirty-four corporations has significantly reduced healthcare costs through employee participation in a prevention-based health program.

 According to the study, 15% of employees at most companies account for 78% of all medical costs. By increasing participation in  preventive healthcare programs, companies can start decreasing the costs for employees.

According to a study by The American Journal of Health Promotion, employers who invested in worksite heath promotion saw a 28% reduction in sick leave absenteeism, 26% reduction in use of health care benefits and a 30% reduction in workers’ comp claims and disability management.

Voluntary Long Term Care Program Part of Health Reform

Voluntary Long Term Care Program Part of Health Reform

One of the lesser known portions of the new Health Care Reform is that there is now a voluntary federal long-term care program designed to pay out a daily cash benefit that beneficiaries can use to help finance nursing home care, home health care, or other needs of the disabled.

As Medicare only covers limited nursing home care, many people are ill prepared for expenses relating to extended care following illness or accidents.  Only about 7 million people in the U.S. have purchased Long Term Care coverage.

 The CLASS program (Community Living Assistance Services and Supports) is not limited to the elderly.  Anyone who elects the payroll deduction can enroll and draw benefits.

The health care reform law requires the Department of Health and Human Services to set up a new, voluntary long-term care insurance program to take effect in January 2011. Participants will sign up through their employers, and the monthly premiums will be collected through payroll deductions.

After five years of enrollment, the policyholder will be eligible for benefits, regardless of age.  The program will not pay for the entire cost of nursing home care, which in some areas can reach more than $70,000 a year. Instead, it will pay cash benefits of $50 per day or more, depending on the degree of disability.

This is probably inadequate to fund possible future needs.  We recommend discussing additional coverage with your financial planner, or contact our office at (888) 474-6627.

Automotive Repair Shops

Automotive Repair Shops

There are over 136,000 automotive repair establishments nationwide employing over 650,000 people.

CNA offers competitive pricing for automotive repair shops and will write BOP, Auto and Workers’ Compensation.

Other key features with CNA for this class include:

  • Mechanics Tools and Equipment Coverage
  • Garagekeepers Coverage
  • Hired and Non-Owned Liability with or without Physical Damage

Automotive repair classes include:

SIC Description
753201 Top, Body, & Upholstery Repair & Paint Shops
753202 Auto Upholstery Shops
753203 Automotive Dent Removal
753204 Automotive Detail Shops
753205 Automobile Body Repair
753302 Automotive Exhaust Systems Shops
753400 Tire Retreading & Repair Shops
753602 Automotive Glass Shops
753702 Automotive Transmission Shops
753901 Automotive Repair Shops
753902 Automotive Shocks & Struts Shops
754902 Automotive Lube & Oil Change Shops
754903 Automotive Rust Proofing

Travelers and OneBeacon will also write BOP and Auto for these classes.

Monoline Workers’ Compensation is available with the Hartford, ACE, AIG and Zurich.