|
UltraLink - FOCUS...on benefits
July 2004
Supreme Court Limits HMO Lawsuits
In a June 21st decision, the Supreme Court upheld federal oversight of employee benefits programs by striking down a Texas patient rights law. The Texas law, one of a handful of such state laws, allowed individuals in employee-sponsored HMOs to sue in state court for malpractice when adverse health effects result from denial of coverage.
In its ruling, the Court agreed with the insurance industry's view that HMOs make coverage - not medical - decisions, and as such cannot be held liable for the effects of medical care. Since HMOs are making administrative decisions regarding benefit plans, the Court noted that the Employee Retirement Income Security Act (ERISA), the federal law governing employee benefits programs, prevails over state laws. Justice Clarence Thomas wrote in the Court's opinion that allowing such state oversight would undermine the intent of ERISA, which was established in part to encourage the provision of benefit plans by subjecting them to federal oversight rather than a patchwork of state laws.
Whether the ruling will increase the likelihood of a national patients' rights law remains unclear, although those close to the patients' rights efforts predict that no legislation will be passed this session.
UnitedHealth Group Says Consumer-Directed Plan is Effective
In one of the largest studies of consumer-directed health plans (CDHPs) to date, UnitedHealth Group (UHG) is reporting trends that suggest these plans may be effective in changing consumer behavior and moderating costs.
UHG compared 20,000 members enrolled for two years in iPlan, their consumer-directed product, to 25,000 members enrolled in a traditional PPO. Among the findings: iPlan members had higher utilization of preventive services, used the UHC consumer portal and its health information tools more and exhibited lower-than-expected medical cost trends over the two-year period. The study also showed that in-network utilization was high, as was member satisfaction with the CDHP.
UnitedHealth Group plans to enhance iPlan in the coming year with investment accounts and portability options.
2005 Premium Projections Better, But Still High
Early predictions of 2005 premium increases of 9 -10% are better than those seen in recent years, but still substantially higher than the overall rate of inflation.
Underlying medical costs appear to be moderating somewhat, with a 7.4% increase in 2003 compared to 9.5% and 10% in the preceding two years. However, with a general inflation rate of 1.9% these medical cost increases are still of major concern. Recent data released by the Center for Studying Health System Change (CSHSC) indicate that the greatest rate of medical cost increase appears to be in outpatient centers, as new technology allows procedures previously done in the hospital to be performed on an outpatient basis. Hospital cost increases of 6.5% appear to be driven by higher charges rather than utilization, while the shifting of pharmacy costs to consumers through tiered benefit design has slowed increases for this component to 9.1%.
USB Investment Research analysis of early data on 2005 premiums from Hewitt indicates that insurers are seeking increases of about 14% on average, which, after negotiations and plan design changes, is expected fall to 9 - 10%. According to the CSHSC, final premiums increased 16% in 2003 and 13% in 2004.
Number of Cancer Survivors Grows
With ongoing concern about health care costs, it is important to consider from time to time the benefits gained from all that spending. Recent statistics published by the Centers for Disease Control indicates that treatment of one of the most dreaded diseases, cancer, is improving.
The CDC reports that patients who were diagnosed with cancer between 1995 and 2000 have an estimated 64% chance of surviving at least 5 years after diagnosis, compared to a 50% survival rate for those diagnosed a decade earlier. Progress has been particularly notable n the treatment of children with cancer, with 5-year survival rates currently at 80%, compared to 50% in the 1970s.
| 
