News & Views

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News & Views is an electronic e-mail publication of the Pennsylvania Association of Health Underwriters.  These clips of industry news from trusted sources on the Internet are archived on the PAHU website at this location.
'News & Views' is currently sponsored by HUPAC - Health Underwriters Political Action Committee - HUPAC is NAHU's political action committee. It is the expression of our First Amendment rights to free speech and association guaranteed under the Constitution. Such political expression has become far more than a useful option for professionals in a heavily regulated business like the health insurance industry. It has become a necessity. HUPAC is registered with the U.S. Federal Election Commission. Since NAHU and similar organizations are prohibited from making political contributions, HUPAC was created to allow contributors to combine their financial support to a candidate to achieve maximum effect. Please visit http://www.nahu.org/government/hupac/index.htm for more information.  

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PAHU-PAC Now Ready to Accept Member Contributions! - click here >>

PAHU Files To Operate A Political Action Committee - click here >>

You may CHECK your CE Credits or RENEW your Pennsylvania License ONLINE - You May Now Renew your Individual License ONLINE - All Through SIRCON - click here >>

What's Happening In Harrisburg?  Get the latest news from Capitol Hill...

LEG-REG REVIEW by Phillips Associates - click here >>

PAHU's Statement on S.B. 495 (Mandated Colorectal Screening) - click here >>

Search The Pennsylvania House and Senate Electronic Bill Room - click here >>

Measure the Quality of Pennsylvania's Commercial HMOs - PHC4’s fifth report about the quality of care that HMO networks offer - click here >>

Pennsylvania's Congressional Delegation - Where They Stand On The Issues - click here >>

 

PAHU State Issues Position Paper - click here >>

 

Measure the Quality of Pennsylvania's Commercial HMOs - PHC4’s fifth report about the quality of care that HMO networks offer - click here >>

The PAHU Annual Convention was held on September 29th - 30, 2003 at the 
Yorktowne Hotel in York, Pennsylvania. View Convention Photo Highlights - click here >>

Producer Licensing, SB 1416 passes Pennsylvania House - Lobbyist , Vince Phillips sends Thank you letter to House Members - click here >>

Teacher's Guide To Act 147 - Phillips & Associates - click here >>

NAHU Membership Affinity Program - click here >>  Great Deals! Great Discounts!

Visit the Pennsylvania Cable News Television Website - click here >>

PHILLIPS ASOCIATES' LEG-REG REVIEW - 12-31-2003

PHILLIPS ASOCIATES' LEG-REG REVIEW - Special Report - 12-23-2003

PHILLIPS ASOCIATES' HAYS GROUP REPORT - 11-25-2003

COST WORRIES LOOM OVER HMO SHARES - 09-23-2002

US KIDS RISK LOSS OF HEALTH COVERAGE: REPORT - 09-23-2002

EXPERTS: HEALTH INSURANCE GAPS STRESS U.S. FAMILIES - 09-19-2002

INDEPENDENCE BLUE CROSS FOCUSES ON FRAUD; EFFORTS RESULT IN CONVICTIONS AND RECOVERY OF MILLIONS OF DOLLARS - 09-19-2002

BIG PICTURE' HEALTH IMPROVEMENTS FOR AMERICANS - 09-17-2002

LIFE AND HEALTH INSURERS' PROFITS UP 32.8% IN FIRST QUARTER 2002 - 09-17-2002

EMPLOYEES PAY GROWING SHARE OF HEALTH BENEFIT COSTS - 09-06-2002

STANDARD & POOR'S AND INDUSTRY EXPERTS TO DISCUSS HEALTH CARE CREDIT OUTLOOK THURSDAY, SEPTEMBER 12, 2002, IN NYC - 09-06-2002

HMOS' AND HEALTH INSURERS' PROFITS INCREASE 25% TO $4.1 BILLION IN 2001, ACCORDING TO WEISS RATINGS; BLUE CROSS BLUE SHIELD PLANS DRIVE INCREASE WITH $2.9 BILLION PROFIT - 09-04-2002

U.S. UNVEILS NEW MEDICARE DRUG DISCOUNT CARDS - 09-04-2002

PENN TREATY AMERICAN CORPORATION RECOMMENCES SALES IN TENNESSEE - 08-28-2002

STATE EFFORTS TO MANAGE HEALTH INSURANCE BACKFIRING - 08-28-2002

VSP PROGRAM FINDS 28% OF CHILDREN HAVE VISION-RELATED PROBLEMS - 08-27-2002

GE VOLUNTARY BENEFITS PRODUCT GROUP DEVELOPS BREAKTHROUGH DISABILITY INSURANCE DESIGN; DISABILITY PRODUCT PROVIDES ULTIMATE FLEXIBILITY FOR EMPLOYER & EMPLOYEE NEEDS - 08-27-2002

AMERICAN NATIONAL RESTATES 2ND-QTR PROFITS LOWER - 08-22-2002

CONSECO, INC. NOTEHOLDERS FORM AD-HOC COMMITTEE - 08-22-2002

ILLINOIS INSURER TO PAY PHARMACISTS THAT SWITCH TO GENERICS - 08-21-2002

HEALTH CARE INFLATION OUTPACES ALL OTHER COST INCREASES - 08-21-2002

FORTIS, INC. AND FORTIS HEALTH ANNOUNCE LEADERSHIP CHANGES - 08-20-2002

STATE REGULATION OF HEALTH INSURANCE INCREASES COST AND THE NUMBER OF UNINSURED REPORTS NEW CONNING STUDY - 08-20-2002

PENNSYLVANIA ATTORNEY GENERAL FISHER SENDS LETTER TO PA INSURANCE COMMISSIONER KOKEN URGING HER TO STOP JUA HEALTH INSURANCE INCREASE - 08-16-2002

SOUTH CAROLINA BLUECROSS OFFERS NEW SMALL GROUP HEALTH PLAN WITH ZERO DEDUCTIBLE - 08-16-2002

HEALTH REIMBURSEMENT ARRANGEMENTS - 08-15-2002

LTC AND DISABILITY INCOME - 08-15-2002

IRS ISSUES CAUTIOUS LETTER ON OBESITY HEALTH EXPENSES - 08-14-2002

STATES SURPASS FEDERAL PRODUCER-LICENSING REQUIREMENTS; PREVENT CREATION OF NARAB - 08-14-2002

CONSECO LOOKS TO RESTRUCTURE DEBT - 08-12-2002

CONSECO, INC. EXERCISES 30-DAY GRACE PERIOD ON BOND INTEREST PAYMENTS; HIRES ADVISORS TO BEGIN DISCUSSIONS ON RESTRUCTURING CAPITAL OF PARENT COMPANY - 08-12-2002

UNINSURED ADULTS GET KIDS' HEALTH FUNDING - 08-10-2002

GOVERNMENT WARNS BUSINESS OWNERS ON HEALTH PLAN SCAMS - 08-10-2002

AMERICAN MEDICAL SECURITY GROUP TO END PRACTICE OF REUNDERWRITING - 08-09-2002

HEALTH CARE COSTS CONTINUE TO RISE, ACCORDING TO SURVEY BY BUCK CONSULTANTS - 08-09-2002

PENN TREATY AMERICAN CORPORATION RECEIVES OPTION EXERCISE FOR REINSURANCE - 08-07-2002

ARE YOU ELIGIBLE? HEALTH INSURANCE OFFERED BUT NOT USED - 08-07-2002

PENNSYLVANIA DEPUTY INSURANCE COMMISSIONER ISSUES ORDER APPROVING PROVIDENT MUTUAL'S DEMUTUALIZATION SPONSORED BY NATIONWIDE FINANCIAL - 08-02-2002

NEW DATA: NEARLY 5 MILLION CHILDREN IN AMERICA ARE NEEDLESSLY UNINSURED SECRETARY THOMPSON HELPS KICK OFF ENROLLMENT DRIVE - 08-02-2002

NEW CONSUMER GUIDE HELPS WOMEN MAKE SENSE OF TODAY'S HEALTH BENEFIT CHOICES - 08-01-2002

NEW EBRI RESEARCH: CONSUMER-DRIVEN HEALTH BENEFITS OF GROWING INTEREST TO EMPLOYERS, BUT MAY NOT CONTROL COST GROWTH, REPORT FINDS - 08-01-2002

RISING COSTS LEAD EMPLOYEES TO REFUSE HEALTH BENEFITS - 07-31-2002

AMERICAN MEDICAL SECURITY RECEIVES APPEALS COURT STAY OF FLORIDA DEPARTMENT OF INSURANCE ORDER - 07-31-2002

HEALTH CARE INFLATION PUSHES ANNUAL BENEFIT COSTS UP 5.1% - 07-26-2002

AMERICAN MEDICAL SECURITY GROUP TO CHALLENGE ORDER BY FLORIDA DEPARTMENT OF INSURANCE - 07-26-2002

INDEPENDENCE BLUE CROSS BRINGS HEALTHY LIVING TO THE WORKPLACE - 07-24-2002

ALLIANCE URGES HOUSE PANEL TO APPROVE MED MALPRACTICE BILL - 07-24-2002

A.M. BEST REVISES RATING OUTLOOK ON CONSECO VARIABLE INSURANCE COMPANY - 07-22-2002

HIGH RX PRICES SUPPORT PROFITS, ADS, MARKETING - 07-22-2002

AETNA LAUNCHES NEXT GENERATION IN AETNA HEALTHFUND(TM) FAMILY OF PRODUCTS - 07-12-2002

HMOS HIRE TALENT AGENCY TO PROMOTE HEALTHY IMAGE - 07-12-2002

PENNSYLVANIA ASKS INSURERS TO EXPLAIN SURPLUSES - 07-10-2002

FIRST FEDERAL SAVINGS BANK ACQUIRES EXCHANGE UNDERWRITERS, PITTSBURGH-AREA INSURANCE AGENCY - 07-10-2002

PA INSURANCE DEPARTMENT TAKES ACTION AGAINST UNITRIN INSURANCE GROUP FOR USING RACE-BASED PRICING - 07-10-2002

BANKERS FIDELITY LIFE ANNOUNCES NEW PRESCRIPTION DRUG CARD PROGRAM FOR POLICYHOLDERS - 07-09-2002

HEALTH CARE BACK ON PUBLIC'S FRONT BURNER, POLLSTERS SAY - 07-09-2002

2003 HMO RATES TO INCREASE AN AVERAGE OF 17% - 07-03-2002

PENNSYLVANIA INSURANCE DEPARTMENT ENROLLS 6,000 PENNSYLVANIANS FOR ADULTBASIC IN FIRST MONTH - 07-03-2002

THE ENRON THEORY - 07-01-2002

S&P COMMENTS ON ANTHEM PROPOSED ACQUISITION OF TRIGON - 07-01-2002

NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS REPUDIATES ANNUAL REUNDERWRITING - 06-28-2002

AON SURVEY: HEALTH CARE COSTS WILL CONTINUE DOUBLE-DIGIT INCREASES - 06-28-2002

HEALTH COVERAGE PRESCRIPTION - 06-15-2002

HUMANA FOR INDIVIDUALS - 06-15-2002

PA HOSPITALS HAIL REPEAL OF JOINT AND SEVERAL LIABILITY - 06-14-2002

SC BECOMES 7TH STATE THIS YEAR TO ENACT PRODUCER LICENSING REFORM - 06-14-2002

DESPITE COST CONCERNS, PATIENTS SUPPORT HEALTH COVERAGE - 06-08-2002

MINNESOTA USES PENNSYLVANIA'S APPROACH: BLUE CROSS RECEIVES GREEN LIGHT ON $412 MILLION HEALTH INVESTMENT INITIATIVE - 06-08-2002

REGION'S HOSPITAL S APPLAUD PENNSYLVANIA HOUSE FOR PASSAGE OF INSURANCE REFORM - 06-07-2002

DELTA DENTAL INSURANCE COMPANY SURPASSES ONE MILLION ENROLLEES - 06-07-2002

HMO RATES CONTINUE TO RISE AT DOUBLE DIGIT PACE - 06-06-2002

ING SELLS FORTIS STAKE, BUYERS BET ON CONSOLIDATION - 06-06-2002

FIFTY THOUSAND LOW-INCOME SENIORS WITHOUT DRUG COVERAGE JOIN LILLYANSWERS - 06-04-2002

HOW HAS THE CONSOLIDATION THAT HAS TAKEN PLACE IN THE HOSPITAL INDUSTRY AFFECTED THE BALANCE OF POWER BETWEEN THE HMOS AND THE PROVIDERS? - 06-04-2002

MOODY'S CUTS CONSECO, WARNS OF BANKRUPTCY RISK - 05-29-2002

COLONIAL - PRINCIPAL FINANCIAL GROUP ALLIANCE WIDENS SUPPLEMENTAL BENEFITS DISTRIBUTION NETWORK - 05-29-2002

COSTS OF GROUP HEALTH PLANS AND MEDICAL BENEFITS RISING - 05-23-2002

LACK OF INSURANCE HURTING AMERICANS' HEALTH: REPORT - 05-23-2002

S&P SAYS US HEALTH CARE SECTOR ON THE MEND - 05-21-2002

NEW YORK STATE MANDATES INFERTILITY COVERAGE - 05-21-2002

NEW SURVEY SHOWS DENTAL BENEFITS STILL VALUED PART OF PROSPECTIVE EMPLOYERS' TOTAL COMPENSATION OFFER - 05-17-2002

5-NATION SURVEY FINDS U.S. WORST ON HEALTH CARE ACCESS - 05-17-2002

SMALL BUSINESS HEALTH INSURANCE PLAN COULD BACKFIRE - 05 -09-2002

FEDERAL GOVERNMENT LEADS EDUCATION EFFORT ON LONG TERM CARE INSURANCE THROUGH ITS LONG TERM CARE INSURANCE PROGRAM - 05-09-2002

performance Audit Finds CHIP Program Forfeited $103 Million; Casey Says Funds Should Have Been Used to Address Deficiencies - 05-06-2002

Pennsylvania Insurance Agents and Brokers Now Can Renew Licenses Online; Same-Day Online Service Saves Up to Two Weeks for Applicants -- 05-06-2002

News & Views Archive

COST WORRIES LOOM OVER HMO SHARES

By Kim Dixon CHICAGO, Sept 20 (Reuters) - Managed care stocks, a profitable refuge in the sinking stock market most of this year, have been weighed down in the past month as investors worry about how HMOs will grapple with soaring health costs and maintain fat profit margins. The Morgan Stanley Health Care Payor Index of 12 health insurers has slumped about 8 percent since late August, even though nearly all the companies beat Wall Street predictions for profit last quarter and are expected to repeat the performance for the third quarter.

Health insurers like UnitedHealth Group Inc., the No. 1 U.S. insurer, have rewarded investors with healthy returns over the past year as they pushed through premium increases of up to 20 percent to their 17 million members. Now, investors are bracing for a so-called pushback from those who are footing this bill -- employers and the government. "Employers will make every effort they can to pay less revenue to the HMOs," said Sheryl Skolnick, a health care industry analyst at Fulcrum Global Partners. That could come in the form of reduced benefit packages, and in an acceleration of companies moving to self-insure where employers take on more of the risk and pay less to HMOs, analysts say. No one argues about whether the pushback will occur; it is just a matter of when.

"Part of the reason for the poor performance of the managed care universe over the last several weeks is that investors have turned increasingly pessimistic that managed care companies will receive the pricing increases necessary to sustain the healthy earnings they have become accustomed to," Banc of America analyst Todd Richter wrote this week.

CYCLE - Driving all this is a runaway train that seems unlikely to stop any time soon: health care spending in the United States, about $2.8 trillion this year, is expected to double by 2011 and account for 17 percent of the gross national product, according to government estimates. In the mid-1990s, HMOs competed by trying to steal as many members away from rivals as possible. That kept premiums low, analysts said. Insurers are now willing to give up members who don't make them enough money. Aetna Inc., formerly the biggest HMO, for example, has shed thousands of members in recent years to bring itself back to profitability. Premiums have stayed high during this period. But the tide will inevitably turn. Experts disagree about when. It's that uncertainty that is weighing on the sector, analysts said. Behind UnitedHealth Group and Aetna, some of the biggest HMOs by membership include Cigna Corp., WellPoint Health Networks Inc. and Anthem Inc. <ATH.N>

NOT SUSTAINABLE? - Health insurance prices jumped 12.7 percent this year, the biggest hike since 1990, according to data released by the Kaiser Family Foundation this month. "HMOs are coming away from the ability to raise prices," said Jeff Herman, a manager at the Exeter Life Sciences Fund. "They can't keep passing on these 10 to 15 percent increases." "That's the fear -- when they start competing for members again and have to lower price," said Skolnick.

To stem this tide, employers have been skimming benefits and are moving toward making consumers pay more out of their pocket to fund their medical expenses. UBS Warburg analyst Bill McKeever believes employers still have little choice -- in the short term -- but to go along with the steep premium prices they face. Richter agrees HMOs still have the upper hand in negotiations with employers. But he agrees that can't last forever. "Raising premiums at four to six times the overall inflation rate is not a long-term sustainable business strategy," he said.     Return To Index

US KIDS RISK LOSS OF HEALTH COVERAGE: REPORT

NEW YORK (Reuters Health) - Nearly 1 million of the 3.5 million children enrolled in a federal/state health insurance program known as "SCHIP" are at risk of losing coverage due to a $6 billion cut in federal funding, Families USA warned on Thursday. A report released by the national consumer advocacy group traces the so-called "SCHIP funding dip" to a combination of federal funding issues and states' own budget crises.

Because of budgetary presumptions at the time the State Children's Health Insurance Program was created, the amount of new money coming into the program for fiscal years 2002 through 2004 is down 26% from what it had been in the early years of the program, it said. States also face the loss of $2.8 billion in previous federal allocations to the program. Those dollars are supposed to be returned to the US Treasury because they were not spent within the time frame specified in the SCHIP statute.

The federal Office of Management and Budget projects a 900,000-member drop in SCHIP enrollment, but Families USA suggests that the actual toll could be even larger, due to states' own financial difficulties. Families USA is urging Congress to take immediate action to avert the loss of coverage. It is backing legislation introduced by Sens. Jay Rockefeller (D-WV) and Lincoln Chafee, (R-RI) to eliminate the funding dip.     Return To Index

EXPERTS: HEALTH INSURANCE GAPS STRESS U.S. FAMILIES

WASHINGTON (Reuters Health) - One in five American families has at least one member who lacks medical coverage, putting the entire family at greater risk of poor health and financial ruin, according to an expert panel's report released Thursday. The report warns that often-cited figures on the number of uninsured Americans--roughly 39 million individuals in all--masks the impact of the problem on their relatives. About 20 million more persons, 40% of them children, are in a family unit with an uninsured person, it states.

Researchers have known for years that individuals who lack insurance get less regular healthcare and often have poorer overall health than those with coverage. Members of the Institute of Medicine (IOM) panel releasing the report now say they have evidence that those negative health effects also spread to other family members who have coverage."When not everyone is covered, the family, in effect, is not covered," said Arthur L. Kellerman, the chair of the department of emergency medicine at Emory University in Atlanta, Georgia, and the co-chair of the IOM panel. The IOM is part of the National Academy of Sciences, a privately-run organization created by Congress that conducts studies and advises the federal government on policy issues.

While most insured US families are covered by employer-subsidized policies, the anemic economy and steadily rising insurance costs mean that fewer and fewer bosses are offering coverage. Those that do may pare down coverage, no longer covering spouses or children on a worker's policy, according to the report. Low-income families face the greatest risk, since the cost of food and housing tends to squeeze out the ability to pay for insurance premiums, Kellerman said. Even wealthier families are unlikely to tap their family budgets to seek regular medical care for an uninsured member. Kellerman told reporters that the nation's insurance system is really a "hodgepodge" of private and government insurance programs that leaves millions of families with gaps in coverage as members retire, change jobs, or enter the workforce.

Federal and state programs cover most children without health insurance but less than half of the 8 million children who are eligible are enrolled. Parents who lack coverage are less likely to enroll their kids in such programs, possibly because of a lack of trust in the healthcare system, the panel said. The scenario forces many families to pick and choose who to cover out of limited funds. Most will choose to cover a working parent so that wages are less likely to be lost in the event of illness. That still leaves the budget vulnerable to ruin if someone else in the family falls ill or sustains an injury, said George Eads, an economist with Charles River Associates in Washington, DC, and a member of the IOM panel. "They basically place a bet. The families have a rational choice. It's like playing the lottery," he said.

IOM's experts do not plan to make recommendations on how to expand insurance coverage to more Americans until the end of 2003, when they issue a final report. Congress is currently involved in a debate over whether to expand government health programs or extend tax credits to help more Americans afford coverage.     Return To Index

INDEPENDENCE BLUE CROSS FOCUSES ON FRAUD; EFFORTS RESULT IN CONVICTIONS AND RECOVERY OF MILLIONS OF DOLLARS

PHILADELPHIA, Sept. 9 /PRNewswire/ -- At a time when skyrocketing costs are threatening America's health care system, Independence Blue Cross is redoubling its efforts to control a major source of increased costs -- health care fraud. During the last 18 months alone, IBC has referred 62 cases of suspected fraud or abusive practices to federal, state or local law enforcement or state regulatory authorities. During the same period, as a result of IBC referrals, 23 individuals or business entities were indicted on health care fraud charges; 14 individuals were convicted and sentenced. In addition, IBC recovered over $11.4 million from a variety of sources, including court-ordered restitution, returned medical and pharmacy claims payments, stopped claim checks, and providers who received payments to which they were not entitled. An additional $6.8 million has been targeted for recovery and is being pursued.

All of this activity occurs inside IBC's Corporate and Financial Investigations Department (CFID), the group charged with the prevention, detection and investigation of all potential areas of fraud and abuse against the IBC family of companies. "As the health care system increases in sophistication," said G. Fred DiBona, Jr., IBC President and CEO, "so does its vulnerability to fraudulent schemes -- something not lost on those who would attempt to commit health insurance fraud. For us to reinforce and expand our anti-fraud and abuse strategies makes good business sense." Nationally, Blue Cross and Blue Shield Plans saved nearly $250 million last year through aggressive health care fraud investigations, improved coordination among member companies and increased sharing of information with law enforcement officials, according to the Blue Cross and Blue Shield Association (BCBSA). "Estimates of health care dollars lost to fraud range from 3 percent to 5 percent of our total national outlay of health care," said David Ignatius, director of national anti-fraud programs at BCBSA. "When you consider our nation's $1.3 trillion health care price tag, those lost dollars amount to $35 billion to $60 billion a year." CFID Director Edward J. Litchko said early detection of potential fraud and abuse is key to the department's success.

Since the beginning of 2001, Litchko said, his department received more than 600 reports of suspected fraud, most involving professional providers. He said many of the reports come from IBC employees who become suspicious in the course of their work. IBC members also call CFID to report suspected fraud after reviewing the "Explanation of Benefits" forms on which IBC records the services billed to IBC and paid on the member's behalf. To report suspected fraud or abuse, call the Anti-Fraud hot line at 215-640-7470. Or write: Corporate and Financial Investigations Department, Independence Blue Cross, 1901 Market Street, 15th floor, Philadelphia, PA 19103     Return To Index

BIG PICTURE' HEALTH IMPROVEMENTS FOR AMERICANS

WASHINGTON (Reuters Health) - Americans' average life expectancy and infant mortality rates are at their best ever, though large gaps in health still exist between races, according to a report released by federal health officials Thursday. According to the report, the average American infant born in 1999 is expected to live 76.7 years, with females enjoying a 5.5-year longer average than men. Still, white Americans have a life expectancy of 77.3 years on average, while African Americans could expect to live just 71.4 years.

Average life expectancy for white females ticked down slightly, from 79.5 years in 1998 to 79.4 years in 1999. Black males born in 1999 have an average life expectancy of 67.8 years, nearly 7 years shorter than for white males. Experts credit improved hygiene, advancing health technology, and lower smoking rates with steady improvements in overall life expectancy during the 1900s. End-of-the-century average life expectancy was nearly double what it was in 1900 and 8.5 years longer than it was in 1950, according to the report.

Diane Maykuc, a statistician and co-author of the report from the federal Centers for Disease Control and Prevention (CDC), said that the study clearly shows "big picture improvements" in Americans' health since the middle of the century. Overall annual death rates dropped in all age categories since 1950, while common causes of death, such as infectious disease and stroke, are all less prevalent than they once were. Heart disease remains the nation's number-one killer, claiming the lives of 725,000 Americans in 1999. The figure is down slightly from 20 years ago. Meanwhile, deaths from cancer increased by 32% between 1980 and 1999, reaching nearly 550,000 in that year.

Infant mortality rates remained at 7.2 infant deaths per 1,000 live births in 1998, the last year for which data were available. The figure was unchanged from the previous year but is the lowest of the 20th century. The US ranks 28th in the world in infant mortality, down from 12th in 1960. "Our ranking isn't great, but overall rates are declining," Maykuc said. Hong Kong was ranked first, with an overall infant mortality rate of 3.2 deaths per 1,000 live births.

Officials said that they were encouraged by continued improvements in life expectancy, a crude measure of Americans' overall health. But along with the improvements come challenges, Maykuc said. The number of Americans over 65 has nearly tripled since 1950, now comprising 13% of the US population. In 1950, seniors accounted for just 8% of the population. "The aging of the population is one of the great challenges the country will face," she said.

The exploding elderly population is already taking heavy tolls on the nation's finances. Americans spent $1.3 trillion on healthcare in 1999, a figure that is expected to rise as the population ages and requires more care. The US already spends 13.1% of its gross domestic product on healthcare, far more than any other nation, according to the report. More than 40 million Americans were without any form of health insurance in 2000.

Officials also remain concerned about exploding rates of obesity among Americans. As many as 61% of Americans are now considered overweight or obese, including 13% to 14% of children. The percentage of overweight children and adolescents has nearly tripled since the 1960s. Experts are beginning to see the effects of obesity on the nation's health, Maykuc said. Deaths from diabetes, a leading consequence of obesity, doubled between 1980 and 1999, according to the report.     Return To Index

LIFE AND HEALTH INSURERS' PROFITS UP 32.8% IN FIRST QUARTER 2002

PALM BEACH GARDENS, Fla., September 16, 2002 - The nation's life and health insurers recorded a $4.5 billion profit for the first three months of 2002, representing a $1.1 billion, or 32.8 percent, increase over the same period last year, according to research by Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds, and stocks. An increase in net written premiums of $6.1 billion, or 5.2 percent, drove the profit growth. Net written premiums increased from $117.7 billion in first quarter 2001 to $123.8 billion in 2002. Also contributing to the industry's first quarter profitability were declines in policy surrenders, life claims, and annuity claims.

"Insurers' revenues were buoyed by an increase in life insurance sales in the months following the September 11 terrorist attacks," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "Consumers were unexpectedly reminded of the need to protect their loved ones in case of an untimely demise. At the same time, many investors were exiting the stock market and purchasing insurance investment products in an effort to gain more financial security."

Industry Capital Shrinks - Despite the growth in earnings, insurers suffered a 0.4 percent shrinkage in capital, falling from $233.1 billion at March 31, 2001 to $232.3 billion at March 31, 2002. The decline in capital was primarily caused by a $2.2 billion increase in the asset valuation reserve (AVR) liability - an increase required by state regulators to protect against future investment losses.

Junk Bond Holdings Up Eight Percent - Investments in junk bonds totaled $117.1 billion at the end of first quarter 2002, up eight percent compared to last year, as companies sought higher yields to support payouts on investment products. "This continued upward trend in junk bond holdings is disturbing given the high default rates this year. We hope to see the trend stop short of the dangerous levels reached in the early 1990s," added Ms. Gannon.     Return To Index

EMPLOYEES PAY GROWING SHARE OF HEALTH BENEFIT COSTS

BENEFITNEWS.COM - Health insurance premiums surged an average of 12.7% last year, the largest increase since 1990, leading more employers to scale back benefit coverage and increase employees’ share of the costs, according to an annual employer survey released today by the Kaiser Family Foundation.

Premiums for individual coverage in group health plans cost an average of $3,060 this year, while family coverage averages $7,954, according to the survey of 750 employers. Employee costs for single coverage average $454 per year. The employee share of premiums for family coverage averages $2,084. Deductibles for in-network providers in PPO plans rose 37% to $276, up from $201 in 2001. 

“One of the most alarming findings is the continued growth of underlying health care expenses, which indicates that we can expect double-digit inflation for the foreseeable future,” observes Jon Gabel, vice president at the Health Research and Educational Trust (HRET), which co-sponsored the survey. 

The use of three-tiered cost sharing in prescription drug benefit plans has nearly doubled since 2000, increasing to 57% of the responding employers. The costs of drugs within the tiers is also higher, with brand name drugs with generic substitutes costing an average of $26, compared to $20 per prescription in 2001. For more survey responses, visit the Kaiser Family Foundation Web site.     Return To Index

STANDARD & POOR'S AND INDUSTRY EXPERTS TO DISCUSS HEALTH CARE CREDIT OUTLOOK THURSDAY, SEPTEMBER 12, 2002, IN NYC

NEW YORK, Sept. 5 /PRNewswire/ -- Health care industry ratings have held up well during the current economic downturn, helped by easing pricing pressures, but will the relative calm be pierced by rising costs as an aging population demands the latest in medical advances? Join Standard & Poor's Ratings Services health care credit analysts and leading industry experts as they discuss these and other issues and their impact on credit quality for hospitals, health insurers, managed care companies, pharmaceutical firms, and medical device manufacturers. WHEN: Thursday, September 12, 2002 - 8 a.m. to 4 p.m. Eastern Time WHERE: McGraw-Hill Building, 1221 Avenue of the Americas, 2nd Floor Auditorium, New York City To register, please contact Standard & Poor's Events Marketing Department at 212-438-2800. Members of the media may contact Gregg Stein, media relations manager, at 212-438-1730.     Return To Index

HMOS' AND HEALTH INSURERS' PROFITS INCREASE 25% TO $4.1 BILLION IN 2001, ACCORDING TO WEISS RATINGS; BLUE CROSS BLUE SHIELD PLANS DRIVE INCREASE WITH $2.9 BILLION PROFIT

PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--Sept. 3, 2002--The nation's HMOs and health insurers(1) reported a 25 percent increase in profits for 2001, earning $4.1 billion for the year, compared to $3.3 billion in 2000, according to research by Weiss Ratings, Inc., the nation's leading independent provider of ratings and analyses of financial services companies, mutual funds and stocks.

In analyzing the industry's profitability, Weiss found that Blue Cross Blue Shield plans as a group produced a $2.9 billion profit, or 70 percent of the industry's $4.1 billion aggregate net earnings. This represents a 40 percent increase over the Blues' $2 billion profit recorded in 2000. Of the 54 Blues plans, 49, or 90.7 percent, reported a profit in 2001, up from the 85.2 percent of plans reporting a profit in 2000.

"Like HMOs, Blues plans have benefited from rate increases over the last several years," commented Melissa Gannon, vice president of Weiss Ratings, Inc. "However, with a more diversified product line, the Blues are positioned to take advantage of the public's dislike of HMOs by also offering PPOs, point of service products, and traditional indemnity plans."

Meanwhile, 2001 profits at the nation's 573 HMOs declined to $1.01 billion, representing a 6.87 percent decrease from the $1.08 billion recorded in 2000. Texas HMOs trailed the rest of the nation, reporting an aggregate loss of $477 million, followed by Kansas where HMOs posted an aggregate loss of $53 million. In contrast, New York and California HMOs reported the highest aggregate earnings at $702 million and $611 million, respectively.

"This mild profit decline is not of great concern but may be a sign that increasing medical costs are beginning to outpace the rate increases of the past few years," said Ms. Gannon. Profits at other traditional indemnity health insurers posted a 54 percent year-over-year increase, showing a net profit of $202 million in 2001, up from $131 million in 2000. <http://www.WeissRatings.com>     Return To Index

U.S. UNVEILS NEW MEDICARE DRUG DISCOUNT CARDS

By Lisa Richwine WASHINGTON (Reuters) - U.S. officials on Friday unveiled a revised plan for drug discount cards that they estimate would save elderly people on Medicare an average of $170 each per year, but drugstore chains may challenge the program in court. The cards will cost $25 or less and serve as a first step to help Medicare patients pay for medications, said Tom Scully, head of the Center for Medicare and Medicaid Services.

"Until a Medicare prescription drug benefit is available, the discount card initiative should give them some needed relief," Scully said. Members of Congress are struggling to agree on a prescription-drug benefit for Medicare, the federal health insurance program for older Americans. Scully said the Bush administration still is pressing lawmakers to pass a plan this year. Officials hope the discount cards will be available early next year. But chain drug stores, worried the program will hurt their business, won a delay against an earlier plan and also may fight the new cards in court. "I wouldn't rule out" another legal challenge, said Crystal Wright, a spokeswoman for the National Association of Chain Drug Stores, whose members include CVS Corp. and Wal-Mart Stores Inc. .

Medicare generally does not cover outpatient drugs. Although many Medicare patients have some coverage through private insurance or government programs for the poor, 10 million or more older people have to pay the often hefty costs out of their own pocket. The discount card plan announced on Friday is a revised version of a proposal unveiled in February. Under the plan, Medicare will endorse various cards from sponsors that have secured rebates or discounts from drugmakers. Patients can sign up for only one card but will have the option to switch every six months, Scully said.

Each plan's drug prices will be posted on a Web site so Medicare patients can compare various offers, Scully said. Average overall savings are expected at 10 percent to 13 percent, or about $170 per person each year, health officials said. They estimated about 10 million people will participate, saving a combined $1.2 billion to $1.6 billion the first year. Several drug companies have offered discount cards, as have pharmacies. In their earlier court challenge, chain drug stores argued that the Medicare agency did not have the authority to create its card program. Wright said the retailers worry that the program will hurt their business by steering patients toward mail-order prescription services and will deprive cardholders of help from a face-to-face visit with a pharmacist.     Return To Index

PENN TREATY AMERICAN CORPORATION RECOMMENCES SALES IN TENNESSEE

ALLENTOWN, Pa., Aug. 27 /PRNewswire-FirstCall/ -- Penn Treaty American Corporation today announced that it will immediately recommence sales of its long-term care insurance products in the state of Tennessee. The Company will sell its policies through its largest subsidiary, Penn Treaty Network America Insurance Company. The Company, through its wholly owned direct and indirect subsidiaries, Penn Treaty Network America Insurance Company, American Network Insurance Company, American Independent Network Insurance Company of New York, Penn Treaty (Bermuda), Ltd., United Insurance Group Agency, Inc., Network Insurance Senior Health Division and Senior Financial Consultants Company, is primarily engaged in the underwriting, marketing and sale of individual and group accident and health insurance products, principally covering long-term nursing home and home health care.     Return To Index

STATE EFFORTS TO MANAGE HEALTH INSURANCE BACKFIRING

BENEFITNEWS.COM - The lack of a national health care policy has left states on their own to decide how best to regulate health insurance. The resulting hodgepodge of laws is increasing already sky-high health costs and contributing to the number of workers without health care coverage, according to a new study. 

Researchers from Conning Research & Consulting examined more than 1,800 state mandates relating to health care benefits, providers and administrative policies and found that such measures collectively increase the cost of health insurance by 15% to 25%. 

“We are seeing an unprecedented increase in the reach and regulatory complexity of state efforts to manage health insurance,” says Conning VP and study author Robert Booz. Without a uniform national approach, there continues to be a “power struggle between states and the federal government to regulate insurance.” 

For the complete report, call 888-707-1177 or visit www.conning.com.     Return To Index

VSP PROGRAM FINDS 28% OF CHILDREN HAVE VISION-RELATED PROBLEMS

SACRAMENTO, Calif., Aug. 26 /PRNewswire/ -- Approximately one out of every four children has a vision problem, according to the results generated from VSP's series of "Kids Get Focused" events. These figures are consistent with a Prevent Blindness America study, which found that vision problems affect one in four school-age children and one in twenty preschoolers.

VSP recently completed events in seven states as part of its "Kids Get Focused" campaign. The goal is to educate parents about the need for regular eye exams and the role good vision plays in academic and athletic performance. A significant percentage of children failed their screening. "The results of the screenings conducted at these events reinforce the need for parents to schedule regular eye exams for their children," said Dr. Catherine Amos, VSP Board Chair. "Undetected vision problems can significantly hinder a child's performance in school and sports. Therefore, it is critical that parents give their children every opportunity to succeed by making vision care a priority." http://www.vsp.com.     Return To Index

GE VOLUNTARY BENEFITS PRODUCT GROUP DEVELOPS BREAKTHROUGH DISABILITY INSURANCE DESIGN; DISABILITY PRODUCT PROVIDES ULTIMATE FLEXIBILITY FOR EMPLOYER & EMPLOYEE NEEDS

ENFIELD, Conn.--(BUSINESS WIRE)--Aug. 26, 2002--GE Financial Employer Services Group announces today a totally new disability product, sold through payroll deduction, that enables employers and employees to personally tailor their insurance needs by combining benefits and riders in an ultimately individualized package.

This new, precision product offers critical individual voluntary benefits including Partial Disability Coverage, Building Benefits Rider, First Hospital Confinement Rider and Uni-age Pricing, all underwritten by the Professional Insurance Company (In California, PIC Life Insurance Company). The new benefits and rider enhancements put the power of design into the hands of the employer and employees for ultimate flexibility and are based on extensive "voice of the customer" research by GE Financial Employer Services Group.

The first, unique component of the Disability Insurance Plan is the Partial Disability Benefit. This benefit empowers employers by providing an incentive for a valued employee recovering from a disability to return part-time to work. The benefit also assists employees by providing the assurance of an income supplement to their part-time pay as they recover from disability but also return to work. In addition, the disability product can be expanded using the Building Benefits Rider that helps employees increase their benefit period when the insured keeps his or her policy in force over a specified period of time.

Also enhanced is a new First Hospital Confinement Rider which can be added to the product to assist employees with the increasing costs of medical care, a critical issue facing employees today. This rider pays a lump sum benefit for the first hospital stay of each calendar year. The amount payable increases with each day of continuous hospital confinement from $500 for 1 day to a maximum of $5000 for 6 continuous days subject to policy limitations and exclusions. The payout not only goes directly to the employee but can be used to help offset a broad range of expenses such as deductibles, co-payments, travel and other out of pocket costs.

A fourth feature of the GE Voluntary Benefits Disability Insurance product is Uni-age pricing. Regardless of the age of the employees (issue ages are 16-69), the Disability Income is uniformly priced for the insured making the benefit attractive to an employer's entire workforce. This disability product is being offered through the new branding of GE Voluntary Benefits, underwritten by Professional Insurance Company. Under the GE (NYSE:GE) umbrella GE Voluntary Benefits offers a full-line of voluntary insurance products for small to medium-sized business employers through employee payroll deductions.

"We're very excited to be introducing this new disability benefit product. It is unique in the marketplace as it is tailorable to the expressed needs of both employers and employees," says Peter Paul Lucas, Chief Operating Officer, GE Voluntary Benefits Portfolio. "We've been able to tap into our knowledgeable distribution network and also utilize the Six Sigma quality tools of General Electric to effectively understand our customers needs and to design highly flexible disability product accordingly."

Unlike many voluntary disability products available today, the new GE Voluntary Benefits Disability Insurance product can provide Guaranteed Issue coverage. This feature means that policies will be issued to eligible employees without medical exams as long as the total group meets all requirements.

Employer Services Group (ESG) is one of seven GE Financial businesses. It provides employee benefit solutions to small- and medium-sized employers (from two to 1000 employees) with operations headquartered in Enfield, CT. ESG offers a comprehensive portfolio of group insurance plans, including Life and AD&D, Dental, Disability, Vision and Self-funded Medical and Administration. ESG also offers a broad portfolio of voluntary products as well as GE Group Retirement 401(k) plan designs. www.gefinancialbenefits.comwww.gefinancial.com.     Return To Index

AMERICAN NATIONAL RESTATES 2ND-QTR PROFITS LOWER

GALVESTON, Texas, Aug 19 (Reuters) - American National Insurance Co. on Monday restated its second-quarter profits 70 percent lower, as it accounted for realized investment losses on what it previously classified as unrealized. The Galveston, Texas-based insurer restated its second-quarter net profit as $6.1 million, or 23 cents a share, down from $21 million, or 79 cents a share. The change was due to reclassifying losses on stocks and bonds of companies like Conseco, WorldCom and Global Crossing.    Return To Index

CONSECO, INC. NOTEHOLDERS FORM AD-HOC COMMITTEE

Indianapolis, Ind.: Aug. 20, 2002 - Conseco, Inc. (CNCE) announced the formation of an ad-hoc committee of holders of public notes issued by the company. The company is immediately commencing discussions with committee representatives. The ad hoc committee has engaged Fried, Frank, Harris, Shriver & Jacobson as legal advisor, and Houlihan Lokey Howard & Zukin as financial advisor.

The first meeting between the company and the ad-hoc committee is set to occur later this week. The company views formation of the committee at this time as a positive development toward a prompt, successful restructuring. Conseco, Inc. noted that the restructuring involves the capital structure of the holding company only. Conseco Inc.'s three operating units: Conseco Insurance Group, Conseco Finance Corp. and Bankers Life and Casualty Co., continue to operate as usual. The formation of the committee follows the announcement on August 9 that Conseco, Inc. has begun to pursue a financial restructuring to address the holding company's current leverage and liquidity situation.    Return To Index

ILLINOIS INSURER TO PAY PHARMACISTS THAT SWITCH TO GENERICS

BENEFITNEWS.COM - After seeing its prescription drug costs rise 26% last year, Blue Cross Blue Shield of Illinois announced this week that, beginning in January, the state’s biggest health insurer will pay pharmacists $1 each time they persuade customers to opt for a generic prescription. 

Company projections show large pharmacies could earn as much as $10,000 per quarter under the new program, and although Blue Cross offers no hard numbers, the program naturally would also create savings for employer-sponsored prescription drug benefit plans. 

Blue Cross VP Brad Buxton says direct-to-consumer advertising plays a large role in the high prescription rates of brand-name drugs, adding the insurer will have to counter such marketing efforts to make the program succeed. 

“We don’t want to have all of these commercials driving what everybody is taking,” Buxton says. “We are simply trying to encourage what is already a healthy relationship between a pharmacist and the patient.” 

However, some pharmacists and drug company groups aren’t buying that the program will benefit pharmacies or patients. “The only people who would benefit from this is the generic company and the insurance company, and we don’t,” observes Sherman White, a Chicago-based pharmacist. Jackie Cottrell, spokeswoman for the Pharmaceutical Research and Manufacturers of America says, “We don’t think patients will want their insurance company to play doctors.”    Return To Index

HEALTH CARE INFLATION OUTPACES ALL OTHER COST INCREASES

BENEFITNEWS.COM - Prices in most sectors of the economy are relatively flat or even declining, but costs for drugs, hospitalization and other health care services are surging at a 4.9% annual rate, according to the latest government price data. 

The Bureau of Labor Statistics reports that excluding volatile food and energy prices, overall inflation rose 2% over the last 12 months. Health care inflation, however, is more than double that due to higher labor costs, rising prices and increasing utilization for drugs, and steady increases in hospital reimbursement rates, the government reports. 

This inflationary trend will continue due to contributing factors such as the aging of the population and advances in medical care, says George Lane, senior vice president at Marsh USA in Washington, D.C. He notes that the health care provider market is steadily consolidating, giving hospitals more bargaining power with insurers and managed care companies. 

“Hospitals have got more leverage than they have ever had before. Hospital rates are increasing on a month-by-month basis,” Lane comments.    Return To Index

FORTIS, INC. AND FORTIS HEALTH ANNOUNCE LEADERSHIP CHANGES

Fortis Health President and CEO Ben Cutler to Become EVP of Fortis, Inc. And Chairman of Fortis Health. Fortis Health SVP and CFO Don Hamm to Assume Role of President. NEW YORK and MILWAUKEE, Aug. 19 /PRNewswire/ -- Fortis, Inc. and Fortis Health today announced two key management appointments. Ben Cutler will step down from his position as President and Chief Executive Officer of Fortis Health to become Executive Vice President, Fortis, Inc. and Chairman of Fortis Health. Don Hamm, currently Senior Vice President and Chief Financial Officer of Fortis Health, will become President of Fortis Health.

In his new position at Fortis, Inc., the parent company of Milwaukee-based Fortis Health and the U.S. headquarters of Fortis, the international financial services provider, Mr. Cutler will be responsible for directing the company's merger, acquisition and divestiture activities. Mr. Cutler will remain actively involved with Fortis Health and, as Chairman of that company, will continue to have oversight responsibilities for the business. <http://www.fortishealth.com>    Return To Index

STATE REGULATION OF HEALTH INSURANCE INCREASES COST AND THE NUMBER OF UNINSURED REPORTS NEW CONNING STUDY

HARTFORD, Conn.--(BUSINESS WIRE)--Aug. 19, 2002--Focus on national developments in health and insurance regulation has obscured the effects of state mandates. 

A new study from Conning Research & Consulting, Inc. of state health insurance regulation has revealed a hidden crisis adding to the cost of health insurance and increasing the number of uninsured individuals. Further, it indicates that the lack of a consistent health policy at a national level is moving state regulators, interveners, and public purchasers into the policy vacuum. This is creating a regulatory web that has a profound effect on consumers, providers of care, insurance organizations, their shareholders, and corporate America. 

"State Regulation of Health Insurance: The Unseen Crisis" is Conning's comprehensive examination of the various mandates and other influences that affect health insurance. It documents the effects of extra-legislative parties, such as attorneys general, public purchasers, ombudsmen and others, on health insurance regulation at the state level. "We are seeing an unprecedented increase in the reach and regulatory complexity of state efforts to manage health insurance," said Robert H. Booz, Conning Vice President, and principal author of the study. "The unintended consequence of a lack of a national health care policy appears to be a power struggle between the states and the federal government to regulate insurance. These measures are increasing the cost of insurance and limiting the number of people actually covered by mandates." 

The study cites over 1,800 individual mandates relating to benefits, providers, and administrative policies. The study finds these measures collectively increase the cost of health insurance by estimates ranging from 15% to 25%. This is causing some employers to choose not to offer health insurance, or employees to forego buying it because of cost. Insurers are leaving states or the market in general, limiting consumer choice. This fragmentation is diluting the administrative cost containment efforts of major insurers. 

The Conning study, "State Regulation of Health Insurance: The Unseen Crisis" is available from Conning Research & Consulting, Inc. for $1,250 by calling toll free (888) 707-1177 or (860) 520-1521. A complete listing of all Conning Strategic Studies can also be found by visiting the company's website at www.conning.com . 

The author is a Vice President at Conning Research & Consulting, Inc. Mr. Booz has an extensive background in health and managed care. He has been in senior management positions at several HMOs and has consulted nationally and internationally to major health insurance companies. A frequent contributor to health care publications and speaker at health conferences, Mr. Booz is also an adjunct faculty member of The Center for Healthcare and Insurance Studies at the University of Connecticut.    Return To Index

PENNSYLVANIA ATTORNEY GENERAL FISHER SENDS LETTER TO PA INSURANCE COMMISSIONER KOKEN URGING HER TO STOP JUA HEALTH INSURANCE INCREASE

HARRISBURG, Pa., Aug. 14 /PRNewswire/ -- Attorney General Mike Fisher today sent a letter to Pennsylvania Insurance Commissioner Diane Koken urging her to suspend the imposition of the latest increase by the Professional Liability Joint Underwriting Association (JUA). Fisher said the JUA has received approval for a plan that subjects health care providers on Sept. 1 to rate increases as high as 48 percent. The JUA is the "insurer of last resort" for medical malpractice in Pennsylvania and generally covers those physicians who are unable to obtain private insurance coverage. As the insurer of last resort, the JUA is obligated by Pennsylvania statute to insure all physicians who apply for coverage.

Fisher pointed to the passage of Act 13 of 2002, the Medical Care Availability and Reduction of Error Act, and the Fair Share Act as efforts by the General Assembly to address the rising medical malpractice liability costs to health care providers in Pennsylvania. Fisher said the changes in Pennsylvania law should result in lower rates for liability insurance. "Pennsylvania's failure to address the medical liability crisis is going to result in the immediate decline in the quality of health care of all Pennsylvanians as doctors either close down their practices or move out of state," Fisher wrote.

Fisher called on Commissioner Koken to convene a meeting with insurance companies doing business in Pennsylvania to determine why the legislative and procedural changes have not had an impact on rate making. Fisher also asked Commissioner Koken to immediately implement relief to health care providers from surcharges imposed by state law. He noted that Act 13 provides for a discount on surcharges and assessments payable during 2002 by doctors and hospitals under the Medical Care Services Malpractice Act. The Attorney General asked that these discounts, which could lower payments by almost 8 percent, be issued now rather than forcing doctors and hospitals to apply for credits later. Fisher noted that parts of Act 13 do not go into effect until this fall, but these surcharge discounts can be implemented now.

For a copy of Fisher's letter, contact the Press Office at 717-787-5211.    Return To Index

SOUTH CAROLINA BLUECROSS OFFERS NEW SMALL GROUP HEALTH PLAN WITH ZERO DEDUCTIBLE

COLUMBIA, S.C., Aug. 12 /PRNewswire/ -- In keeping with its goal to provide a variety of health plans designed especially for small groups, BlueCross BlueShield of South Carolina's Group and Individual division has introduced a new product that features a zero deductible and no copayments when members use in-network providers. The new plan has been added to the company's Preferred Blue product line for groups with two to 50 members. It is a 70/50 plan, which means that BlueCross will pay 70% for covered services when members use network doctors and facilities, and 50% when they go outside of the network. The Preferred Blue network is one of the largest in the state, with more than 7,500 doctors and 63 hospitals.

The zero deductible means that members receive first dollar coverage. The plan's simplistic design also makes it simple to use. The plan provides for basic health coverage: doctors visits, inpatient and outpatient hospital care and mental healthcare. Dental coverage is offered as an optional benefit. Members will also have access to BlueCross' value-added discount programs, allowing them to save on complementary and alternative medicine, laser vision correction surgery and Beltone hearing aids. Agents can begin quoting plans for their clients August 7 for a September 1 effective date.

"We know that small businesses, their employees and families are the ones who are hardest hit in these times of rising healthcare costs. By designing this new 70/50, zero deductible plan, BlueCross is making it easy for employers to provide healthcare coverage. It's a plan that's easy to use and easy to understand," said Jim Hart, senior vice president for BlueCross' Group and Individual division.

BlueCross' Group and Individual division provides health coverage to more than 6,600 small groups and 87,000 individuals throughout South Carolina. BlueCross BlueShield of South Carolina is an independent licensee of the Blue Cross and Blue Shield Association. For more information, visit <http://www.SouthCarolinaBlues.com>.     Return To Index

HEALTH REIMBURSEMENT ARRANGEMENTS

FINANCIAL E-NEWS(TM) - A growing number of employers are expected to embrace personal account plans as their latest weapon in the continuing battle to control rising health care costs. And, if designed properly, these plans can successfully reduce both short- and long-term costs, according to a newly published research report by Watson Wyatt Worldwide and the Washington Business Group on Health. The IRS recently issued guidelines on personal account plans, also known as Health Reimbursement Arrangements (HRAs), which allow employers to fund personal accounts that can be used to reimburse workers for out-of-pocket medical expenses, including premiums and deductibles. Employees are not be taxed on the reimbursements and unused funds can be carried forward. The complete report is available at: http://www.watsonwyatt.com/research/whitepapers/default.asp    Return To Index

LTC AND DISABILITY INCOME

FINANCIAL E-NEWS(TM) - The long term care industry is booming, but not yet with the baby boomers. Boomers seem to think of themselves as "forever young" (which is, of course, true!) and apparently don't like even the thought of a product that provides benefits for infirmities. This is keeping the average age of LTC buyers in the mid-60s. Industry solutions could be to link LTC coverage with the more palatable concept of disability income and/or stronger marketing of financial accumulation products with potential long term care benefits.    Return To Index

IRS ISSUES CAUTIOUS LETTER ON OBESITY HEALTH EXPENSES

The IRS recently affirmed that health club membership fees incurred for the prevention or alleviation of obesity may be deductible as a medical expense under Code Section 213. 

In a statement, the IRS indicates that “uncompensated amounts an individual pays to participate in a ‘weight-loss program’ as treatment for a specific disease diagnosed by a physician, including obesity, are deductible as medical expenses.” This guidance is in accordance with the IRS’ recognition of obesity as a disease in early April. 

The IRS does warn that the Tax Court has found against taxpayers in instances when other weight-loss and exercise alternatives existed in individual cases. The IRS will consider specific circumstances – notably the location of the health club and services included in membership fees – when reaching decisions. 

Any membership organized for business, pleasure or other social purpose is not eligible for a medical expense deduction.    Return To Index

STATES SURPASS FEDERAL PRODUCER-LICENSING REQUIREMENTS; PREVENT CREATION OF NARAB

35 States Have Met GLBA Reciprocity Standards; More Are Expected This Year. KANSAS CITY, Mo. (Aug. 9, 2002) - The NAIC's National Association of Registered Agents and Brokers (NARAB) Working Group today announced it is recommending that at least 35 states be certified as meeting the reciprocity requirements for non-resident producer licensing under the Gramm-Leach-Bliley Act (GLBA). Additional states are expected to achieve reciprocity later this year and next year. According to GLBA, 29 states are required to meet the standards, which provide for reciprocal treatment of non-resident producers by Nov. 12, 2002.

State insurance commissioners had assigned the NARAB Working Group with monitoring the efforts of state legislatures to enact the NAIC's Producer Licensing Model Law, which was designed to help the states comply with GLBA. The announcement today by the working group is the result of a comprehensive review and analysis of producer licensing laws and practices throughout the states over the past 15 months. The Working Group's recommendation will be presented to the full NAIC membership at the organization's Fall National Meeting, Sept. 9-12, in New Orleans.

"The goal of state insurance regulators is reciprocity in producer licensing, with uniformity being the ultimate objective," said NAIC Vice President and Arkansas Insurance Commissioner Mike Pickens, who also serves on the NARAB Working Group. "This is a huge victory for state regulation. It once again demonstrates that we can work together to achieve a common goal." As a necessary step toward uniformity, the NAIC adopted the Producer Licensing Model Act in 2000 for consideration by state legislatures. The model act provides specific multistate reciprocity provisions to comply with the requirements of the GLBA by creating uniform standards for key areas of non-resident producer licensing. In order to establish reciprocity under GLBA, states were required to pass a four-step test: -- Permit a producer licensed in their home state to sell in nonresident states after satisfying only minimum requirements such as submission of licensing application and payment of all applicable fees; -- Accept the satisfaction of the producer's home state's continuing education requirements; -- Do not limit or condition producer's activities because of residence or place of operations (except that countersignature requirements are still permitted); and -- Grant reciprocity to all other states meeting these reciprocity requirements.

The 35 states that have met the requirement are Alabama, Arizona, Arkansas, Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin and Wyoming. Additionally, Massachusetts, South Carolina and Tennessee have passed producer-licensing legislation and are expected to be reciprocal when their new laws become effective. For more information, www.naic.org/GLBA/index.htm    Return To
Index

CONSECO LOOKS TO RESTRUCTURE DEBT

August 09, 2002 04:17 PM ET By Bill Rigby NEW YORK (Reuters) - Conseco Inc. CNC.N made a last-ditch attempt to survive on Friday as the beleaguered insurance and loan firm stopped interest payments on its bonds for a month and looked to restructure $6 billion in debt. Rating agencies reacted skeptically, cutting the firm's credit ratings to indicate an imminent default, while analysts predicted bankruptcy.

"It would appear to be the end of the line," Colin Devine, an equity analyst at Salomon Smith Barney and a long-time critic of the company, said. "We now expect insurance regulators will assume control of Conseco's various life insurance subsidiaries." Conseco's bonds were trading between 14.5 cents and 16 cents on the dollar on Friday, regardless of maturity. That indicates the market expects a bankruptcy filing, because all unsecured bondholders rank equally in a bankruptcy proceeding. The company's shares did not open for trade on the New York Stock Exchange, pending news. They closed at 34 cents on Thursday, down from a high of $20.20 last year.

NEW PLAN - Conseco, which has wilted under more than $6 billion of debt over the past few years, admitted it needed a new plan to survive. "The barriers to further progress on our turnaround plan now require a different approach," Chief Executive Gary Wendt said in a statement. Wendt, the former GE Capital boss, was brought in two years ago to rescue the firm from the effects of its disastrous acquisition of loan firm Green Tree Financial in 1998. He picked up a $45 million signing bonus when he started.

Under his new plan, which Wendt called "a radical change in the company's capital structure," Conseco will take a 30-day grace period from interest payments on bonds. He has also hired investment bankers Lazard Freres & Co. and lawyers Kirkland & Ellis to negotiate with bondholders to restructure its debt. "Time is of the essence," Wendt added, hoping that the firm strikes a deal with debtholders quickly. He said he was comfortable the firm had the liquidity to operate its businesses throughout the restructuring.

RATING AGENCIES MOVE QUICKLY - Rating agencies, which have warned of Conseco's debt repayment problems for some time, quickly cut their ratings. Standard & Poor's cut the firm's counterparty credit rating to selective default (SD) on Friday, from 'CCC-plus', its very risky junk bond rating. That means the agency thinks Conseco will default on specific obligations while managing to service the rest of its debt. Fitch Ratings cut Conseco's corporate rating three notches 'C' from 'CCC', noting that even if the firm's debt management efforts were successful, any restructured debt would be categorized as "distressed" and therefore "warrant a 'default' rating.   Return To
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CONSECO, INC. EXERCISES 30-DAY GRACE PERIOD ON BOND INTEREST PAYMENTS; HIRES ADVISORS TO BEGIN DISCUSSIONS ON RESTRUCTURING CAPITAL OF PARENT COMPANY

Indianapolis, Ind.: Aug. 9, 2002 - Gary Wendt, Chairman and CEO of Conseco, Inc. (NYSE:CNC), today issued the following statement to the company's stakeholders: "Our board of directors has met several times over the past two weeks to consider various financial options available to the company. We have concluded that the barriers to further progress on our Turnaround plan now require a different approach. Our judgment is that the continued gradual financial restructuring that was the goal of the Turnaround plan is no longer the best course. Rather, "radical change in the company's capital structure" - as one rating agency called for last week - is required. To that end, we are taking the following actions:

We are exercising a 30-day grace period on upcoming bond interest payments; and

We are engaging financial and legal advisors (Lazard Freres & Co. and Kirkland & Ellis) for the purpose of beginning immediate discussions with our debt holders with a goal of restructuring the capital of the parent company.

We cannot emphasize strongly enough our continued belief that the Insurance and Finance businesses that comprise Conseco are profitable businesses that serve important markets. The businesses of Conseco are good businesses that can have bright futures. The problem with Conseco has been the over-leveraged capital structure of the parent. Two other important points: First, none of our operating subsidiaries will be directly involved in the planned restructuring; and, second, we are comfortable that we will have more than ample liquidity to operate our businesses throughout this restructuring period. Finally we note that time is of the essence. In order to maximize the value of our businesses, we intend to move quickly to agree on an appropriate restructuring with all interested parties. In the next few days and weeks, we will be meeting with regulators, rating agencies and other stakeholders to articulate further our plan for this comprehensive restructuring." The company also indicated today that it would issue its second quarter 2002 earnings release on Aug. 14, 2002.   Return To
Index

UNINSURED ADULTS GET KIDS' HEALTH FUNDING

August 08, 2002 01:37 PM ET By Karen Pallarito NEW YORK (Reuters Health) - Congressional investigators say the Bush administration improperly allowed the state of Arizona to use funding intended to expand children's health coverage on insuring adults without kids. A report issued Wednesday by the US General Accounting Office (GAO) concludes that the Department of Health and Human Services' approval of a Medicaid waiver allowing the state to spend those funds on covering childless adults "is not authorized."

Congress created the State Children's Health Insurance Program (SCHIP) in 1997 to cover children of low-income families who don't quality for Medicaid. Any funds unspent by the states are supposed to be redistributed to other states, the GAO said. Allowing states to spend leftover funding on childless adults "could prevent the reallocation of these funds to states that already have exhausted their allocations, as required by the Congress," investigators asserted. Investigators also questioned HHS' decision to allow Arizona and California to use SCHIP funds to cover parents of SCHIP- and Medicaid-eligible kids "without regard to cost effectiveness." GAO said the federal statute allows family coverage only if it can be done at no additional cost.

Sen. Max Baucus (D-MT) and Charles Grassley (R-IA)--chairman and ranking minority member, respectively, of the Senate Finance Committee--requested the review. The GAO focused on recent approvals of Medicaid and SCHIP waivers to cover more uninsured people and to expand access to prescription drug coverage to low-income seniors. HHS strongly disagreed with the findings. The GAO's analysis "is extremely narrow and fails to recognize" that Arizona's waiver promotes SCHIP objectives, it said in a written response. The department expects the demonstration to decrease the number of uninsured children by an additional 2%. It also noted that spending on adults has "not impeded the ability of other states to provide SCHIP coverage to children," contrary to the GAO's assertion.

Branch McNeal, deputy director of the Arizona Health Care Cost Containment System, which administers Medicaid and SCHIP, expressed concern that the report leaves an inaccurate impression "that Arizona is diverting SCHIP funding for children to fund parents and childless adults." He said that the program would only use those funds for childless adults "after children and parents are covered."   Return To
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GOVERNMENT WARNS BUSINESS OWNERS ON HEALTH PLAN SCAMS

As business owners grapple with a third year of double-digit health insurance cost increases, scam artists are cashing in on the trend by aggressively marketing fraudulent health plans to small business owners, the government warned this week. 

In a memo to business owners, Labor Department Secretary Elaine Chao warns employers to be careful when purchasing health coverage from promoters claiming to offer ERISA-governed plans. 

“Insurance scam artists frequently masquerade as a federally regulated employer trust, labor union, or a religious organization and claim to offer low premiums because they are exempt from state insurance regulation,” Chao states in her memo. 

Business owners should be wary of plans offering coverage for premiums significantly lower than market rates, as well as plans promoted by unlicensed insurance agents. All legitimate health plans must be registered with state insurance commissions. Employers are urged to contact state authorities or the federal Pension Welfare Benefit Administration at 1-866-275-7922 to report problems or verify a health plan. 

EBN reported the increase in health plan fraud activity in the May issue. Click here to read the article.   Return To
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AMERICAN MEDICAL SECURITY GROUP TO END PRACTICE OF REUNDERWRITING

Officials at Wisconsin-based American Medical Security Group Inc. said yesterday that the insurer will end the practice of annually reunderwriting individual health insurance policies in 20 states on Jan. 1, the Wall Street Journal reports. American Medical plans to move from the practice of reunderwriting, in which health insurers raise premiums for individual policyholders after they become ill or file claims, to a "block rating" practice, in which insurers increase premiums at the same rate "across a particular policy type" (Terhune, Wall Street Journal, 8/7). Most companies that market health insurance to individuals evaluate patients' medical histories only when they sell the initial policies. However, American Medical reviews the health of policyholders at each annual renewal. The insurer reviews claims that a policyholder has filed in the past year, as well as their disease diagnoses, and assigns points to the claims and diagnoses based on the probability that they wi! ll result in future claims. Under the point system, American Medical places policyholders into one of three tiers -- preferred, manual or substandard. Preferred policyholders receive no increase in their monthly premium rate other than increases based on medical inflation; manual policyholders receive a 5% increase as a result of their health and claims filed; and substandard policyholders receive a 37% increase for the year and for each additional year spent in the tier (California Healthline, 4/9). 

Impact on Reunderwriting: Although a spokesperson for American Medical said that the insurer considers reunderwriting an "acceptable and appropriate way of rating our business," CEO Samuel Miller said in a statement that American Medical "cannot risk the long-term confidence of our agents and insureds because of misperceptions about tier rating." American Medical's decision to end the practice of reunderwriting represents a "blow to the controversial rating practice," the Journal reports. According to supporters of reunderwriting, the practice limits premium rate increases for the "healthiest customers" and "encourages them to remain insured." Opponents, however, reject the practice as "punishing the sick and violating the basic tenet of risk-sharing in insurance" (Wall Street Journal, 8/7). State insurance regulators have begun to address the issue American Health Line, 7/30). Last month, for example, the Florida Department of Insurance suspended the license of American Medical for reunderwriting in! dividual health insurance policies. A spokesperson for Sen. Bob Graham (D-Fla.) said that American Medical's decision to end the practice of reunderwriting will not affect the senator's plans to introduce legislation next month that would prohibit premium increases for individuals based on health (Wall Street Journal, 8/7).   Return To
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HEALTH CARE COSTS CONTINUE TO RISE, ACCORDING TO SURVEY BY BUCK CONSULTANTS

NEW YORK, Aug. 8 /PRNewswire-FirstCall/ -- Employers' health care costs will continue to increase, according to the results of a national survey of more than 80 U.S. health insurers, HMOs and third-party administrators. Released today by Buck Consultants, a leading global human resources consulting firm, the eighth National Health Care Trend Survey projects increases in health care costs for the remainder of 2002 and for the first half of 2003. Insurers reported medical trends for the most popular plans as follows:

"Insurers are predicting upcoming increases between 14-15% for the most popular medical plans. The spread among these options has narrowed over our last several surveys," said survey co-author Brian Stitzel, ASA, a Buck associate principal and consulting actuary.

The survey also continues to report high trends in prescription drug card Programs. "It's encouraging to see that even though prescription drug trends are high, they've decreased slightly since the previous survey," said survey co-author Harvey Sobel, FSA, a Buck principal and consulting actuary. "Insurers, since they have the underwriting risk, continue to be more conservative than pharmacy benefit managers in pricing drug plans."

Health insurers use trend factors by coverage - medical, prescription drugs, dental and vision care - to calculate their premium rates. Large self- funded employers use trend factors to budget their future health care costs. In general, trend factors provide for increases resulting from inflation, utilization of services, technology, changes in the mix of services and mandated benefits. http://www.buckconsultants.com http://www.mellon.com.   Return To
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PENN TREATY AMERICAN CORPORATION RECEIVES OPTION EXERCISE FOR REINSURANCE

ALLENTOWN, Pa., Aug. 6 /PRNewswire-FirstCall/ -- Penn Treaty American Corporation today announced that Centre Solutions (Bermuda) Limited ("Centre"), a subsidiary of Zurich Financial Services Group, has exercised its option to reinsure a portion of the Company's newly issued long-term care insurance policies. Centre provided notice to the Company that it desires to reinsure, on a limited quota share basis, long-term care insurance policies issued after January 1, 2002. The proposed reinsurance agreement would provide additional financial protection to the Company, while enabling it to manage the statutory capital strain typically associated with new business production. The proposed agreement does not include any expense and risk charges, and will allow Centre to proportionately share the profits and risks associated with the reinsured business.   Return To
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ARE YOU ELIGIBLE? HEALTH INSURANCE OFFERED BUT NOT USED

PHILADELPHIA Pa, Aug 7 /Philadelphia Inquirer/ - Editorial | Many of the youngsters in low-income households nationwide who return to school next month don't have health insurance - even though they are eligible for either Medicaid or states' federally subsidized Children's Health Insurance Program (CHIP).

New data from the Urban Institute shows that out of 8 million children in the country without health insurance, 5 million are eligible for coverage through one of those programs. Some parents may not want to go through the hassles of applying. Others, many others, simply don't know that their kids qualify for the help.

A national program called "Covering Kids," by the Robert Wood Johnson Foundation of Princeton, has enlisted corporate and nonprofit partners, including about 3,000 stores in 21 states, to reach parents of eligible children. The worthy goal is to alert those eligible. In Pennsylvania, the foundation has funneled $1 million to the Pennsylvania Partnerships for Children for a four-year outreach program to target uninsured families. It's a great effort, but one that eventually will end, leaving states with the long-term challenge of figuring how to best advertise CHIP and Medicaid coverage.

Pennsylvania and New Jersey have quite a bit of figuring to do. About 184,500 uninsured Pennsylvania children are eligible for coverage. Parents in a family of four earning up to 235 percent of the federal poverty level also are eligible. In New Jersey, 163,000 children are uncovered yet eligible. Unfortunately, the state legislature eliminated thousands of low-income parents from eligibility for CHIP. Since the federal CHIP program was enacted in 1997 under bipartisan legislation, 4 million children have gained health coverage.

To keep that success going, Congress and the Bush administration need to fix a cut of nearly $3 billion over the next three years to CHIP funding. The U.S. Office of Management and Budget predicts such a cut could push 900,000 children out of insurance between 2003 and 2006. Parents of uninsured children need to find out as soon as possible whether their children are eligible. In Pennsylvania, call 1-800-986-KIDS or visit www.compass.state.pa.us. In New Jersey, call 1-800-701-0710.   Return To
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PENNSYLVANIA DEPUTY INSURANCE COMMISSIONER ISSUES ORDER APPROVING PROVIDENT MUTUAL'S DEMUTUALIZATION SPONSORED BY NATIONWIDE FINANCIAL

COLUMBUS, Ohio, and BERWYN, Pa., Aug. 1 /PRNewswire/ -- Executives from Nationwide Financial Services, Inc., and Provident Mutual Life Insurance Company (Provident) announced today that the Deputy Insurance Commissioner of the Commonwealth of Pennsylvania issued an Order on July 31, 2002, approving the Sponsored Demutualization Application filed by Provident and NFS. Upon closing of the proposed transaction, Provident will become a wholly owned subsidiary of NFS and Provident's eligible members will receive consideration in the form of shares of NFS Class A common stock, cash or policy credits.   Return To
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NEW DATA: NEARLY 5 MILLION CHILDREN IN AMERICA ARE NEEDLESSLY UNINSURED SECRETARY THOMPSON HELPS KICK OFF ENROLLMENT DRIVE

Senators Hatch and Kennedy Honored on 5th Anniversary of SCHIP. WASHINGTON, Aug. 1 /PRNewswire/ -- Nearly 5 million children in the United States who currently lack health insurance are eligible for low-cost and free health care coverage through the State Children's Health Insurance Program (SCHIP) and Medicaid, but they are not enrolled. Covering Kids released new state-by-state data, compiled by the Urban Institute, that quantify the number of children who are needlessly uninsured. Using these data to illustrate the need to reach families immediately, Covering Kids launched the Back-to-School 2002 enrollment drive today with the help of Secretary of Health and Human Services Tommy Thompson. "It is shocking to think that nearly 5 million children are uninsured when they do not have to be," said Dr. Steven A. Schroeder, President and CEO of The Robert Wood Johnson Foundation (RWJF). "Nationally, there are 8 million uninsured children. If we can enroll all children who are currently eligible for SCHIP and Medicaid, we would cut the number of uninsured kids to less than half of what it is today." Families can learn more about low-cost and free health care coverage for children by calling toll-free 1(877) KIDS-NOW. Callers will be connected to their appropriate state programs.   Return To
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NEW CONSUMER GUIDE HELPS WOMEN MAKE SENSE OF TODAY'S HEALTH BENEFIT CHOICES

Health Plan Guide for Women' Available Free at www.healthplanguides.com. WASHINGTON, July 31 /PRNewswire/ -- Does your health care plan provide the coverage you need? Which plan is best suited to meet the health needs of your family? How can you take advantage of all the services your health plan has to offer? A new consumer-friendly guide helps women answer these questions and many more. Developed through a collaborative effort by the Jacobs Institute of Women's Health, the National Partnership for Women & Families and the CIGNA Foundation, "The Health Plan Guide for Women: How to Shop for a Plan & Get the Most Value" is specifically designed to help women understand the different types of health benefits plans so they can evaluate and select a plan that best meets their and their family's health care needs.   Return To
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NEW EBRI RESEARCH: CONSUMER-DRIVEN HEALTH BENEFITS OF GROWING INTEREST TO EMPLOYERS, BUT MAY NOT CONTROL COST GROWTH, REPORT FINDS

WASHINGTON, July 30 /PRNewswire/ -- The rising costs of employment-based health benefits have led some employers to consider restructuring them in favor of a more consumer-driven approach, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI). However, the study also notes that the majority of health-benefit costs are incurred by a small minority of patients with chronic illness. Even if consumer-driven health benefits manage to control employer costs for health benefits, they are unlikely to control total costs unless some way is found to affect the spending patterns of the high users of health care services.

The July EBRI Issue Brief, "Can 'Consumerism' Slow the Rate of Health Benefit Cost Increases?" explores the major issues related to consumer-driven health benefits, including why the cost of providing health benefits is increasing, the spectrum of health plan options, and how increased consumer involvement may affect the cost of providing health benefits.

Some of the report's key findings:

Americans have been spending an ever-increasing amount of money on health care services. Health spending totaled $73 billion in 1970, rising to $1.3 trillion in 2000. Spending on health care accounted for 7 percent of gross domestic product (GDP) in 1970, rising to 13.2 percent of GDP in 2000. Health care spending as a percentage of GDP remained largely unchanged after 1993, but it is projected to reach 17 percent in 2011.

Technological innovation in health care accounts for between 49 percent and 65 percent of increases in health spending, while the comprehensiveness of insurance accounts for between 10 percent and 13 percent, according to recent research. Other factors include increased income of employees, differential productivity growth from medical care, and avoidable administrative expense.

The approaches to consumer driven-health benefits fall along a continuum of options. They include the traditional large employer health plan choice model, the out-of-pocket choice model, tiered provider networks, various health spending accounts, and vouchers. At one extreme, employers could provide an array of plan designs from which an employee can choose, as many companies now do. At the other extreme, an employer could simply give employees an increase in cash wages and not offer any health plan, requiring them to determine how best to spend that money on health insurance care services.

While various types of consumer-driven health benefit approaches might result in more efficient spending on health care services, it would not necessarily mean that spending will either decline or slow down. It is well known that a small fraction of the population accounts for a large share of health spending. Among the adult population with employment-based health insurance, the top 1 percent of spenders accounted for 20 percent of all spending in 1998. Overall, the top 10 percent of spenders accounted for 58 percent of all health care spending, while the top 50 percent accounted for 95 percent of all spending.

A movement to consumer-driven health benefits has implications for health benefit costs, utilization of health care services, quality of health care, the health status of the population, risk selection, and efforts to expand health insurance coverage.

Ultimately, the success or failure of consumer-driven health benefits will be measured by its effect on the cost of providing health benefits and its effect on the number of people with and without health benefits," said EBRI President and CEO Dallas Salisbury. However, he added, "Unless consumer-driven health benefits include incentives and tools to affect the spending patterns of high users of health care services, the total cost of providing health care benefits is unlikely to be significantly affected."

EBRI Issue Briefs are monthly topical periodicals providing expert evaluations of employee benefit issues and trends, including critical analyses of employee benefit policies and proposals. Others may purchase copies for $25 prepaid or PDFs for $7.50 prepaid by calling 202-659-0670.   Return To
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RISING COSTS LEAD EMPLOYEES TO REFUSE HEALTH BENEFITS

While the number of employers offering health insurance coverage remained fairly constant from the late 1980s through 2000, the percentage of employees who refused coverage increased slightly, mainly due to cost concerns, according to research by a Harvard University economist. 

The percentage of full-time employees who refused employer-provided health benefits rose from 12% in 1987 to 15% in 2000, according to the study by David Cutler. During the same period, the percentage of employees offered health benefits remained relatively constant at 80%.

Most uninsured Americans are young and in good health, and about half live in households with at least one full-time worker, Cutler says. “Younger workers, because they are paying actuarially more than the coverage is worth, are more likely to decline coverage,” he observes. “They value the benefit, but they don’t want to pay more than they think it’s worth.” 

Some 44 million Americans, or 16% of the population, have no health insurance coverage. For employees, the cost of the coverage is more important than the structure or value of the benefits, according to Cutler’s research. Click here to read the entire report.   Return To
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AMERICAN MEDICAL SECURITY RECEIVES APPEALS COURT STAY OF FLORIDA DEPARTMENT OF INSURANCE ORDER

GREEN BAY, Wis., July 29 /PRNewswire-FirstCall/ -- American Medical Security Group, Inc. (AMS) today announced that the First District Court of Appeals for the State of Florida has stayed the order of the Florida Department of Insurance, issued July 24, 2002, that would have suspended the company's license to operate in that state for one year. The stay is effective until the Court of Appeals rules on the company's request to overturn the order. No date has been set for a hearing on the appeal. AMS agents in Florida can now continue selling the company's health benefit plans for individuals and families.   Return To
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HEALTH CARE INFLATION PUSHES ANNUAL BENEFIT COSTS UP 5.1%

Benefit costs in private industry surged 5.1% for the year ending June 30, driving the nation’s annual compensation costs up 4%, according to the employment cost index (ECI) released by the Labor Department this morning. 

For the second quarter of the year, benefit costs for private industry surged 1.4% as wages and salaries rose 1%. The rising unemployment rate has kept salary demands in check, but renewed health care inflation is putting tremendous pressure on benefit costs, observes economist Joel Naroff of Naroff Economic Advisors. 

“The pressure on benefits continues to grow and that is causing employment costs to rise more rapidly,” Naroff says. “It’s good that productivity gains are strong because businesses need it to offset the rising benefits costs.” 

The slowing economy isn’t giving employers any relief from compensation costs, Naroff adds. “In the private sector, the rise in compensation over the year posted this spring was exactly the same as the increase seen in the spring of 2001.” 

For more details, go to the Bureau of Labor Statistics Web site. http://www.bls.gov/news.release/eci.toc.htm   Return To
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AMERICAN MEDICAL SECURITY GROUP TO CHALLENGE ORDER BY FLORIDA DEPARTMENT OF INSURANCE

GREEN BAY, Wis., July 24 /PRNewswire-FirstCall/ -- American Medical Security Group, Inc. (AMS) announced that it has received a final order from the Florida Department of Insurance, dated today, stating the Department's intention to suspend the company's license to operate in that state for one year. AMS received the order just prior to the close of markets today.

AMS will immediately file a notice of appeal with the First District Court of Appeals for the State of Florida and tomorrow will request an expedited court directive to stay the order. In April 2002, in administrative proceedings on the same matter, an administrative law judge found in favor of AMS on all issues and recommended that all counts of the complaint filed by the Department in May 2000 be dismissed. The May 2000 complaint challenged certain of the company's rating and other practices in Florida.

The Florida Insurance Department's final order today affirmed the recommendations from the judge with respect to six of eight counts. However, the Department reversed the judge's finding that tier rating does not violate state law, and on that basis ordered the suspension of the company's license for one year. The Department's order specifically permits the company to continue to renew its existing business in Florida.

Timothy J. Moore, AMS Senior Vice President and General Counsel, stated that the company has excellent grounds for appeal. "We anticipate a complete reversal of this order on appeal," Moore said. "This order represents an abuse of regulatory discretion in which the department overstepped its authority. "We made a number of good faith efforts to communicate with the Department and find common ground for settlement. While our rating procedures are wholly lawful and appropriate, we were prepared to change them to something more acceptable to the regulator. Unfortunately, our efforts were rebuffed," Moore said. "While we disagree with the ruling by the Florida Department of Insurance, our operating performance remains strong and our operating strategy which has resulted in continued earnings growth remains unchanged," said Samuel V. Miller, AMS Chairman, President & Chief Executive Officer. "We do not anticipate that this ruling will have a material impact on our earnings for 2002 or 2003." Miller said the company now must consider all of its options related to its business in Florida.   Return To
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INDEPENDENCE BLUE CROSS BRINGS HEALTHY LIVING TO THE WORKPLACE

Worksite Wellness Program Offers Workers a Variety of Health Screenings; For Some, the Program is a Genuine Lifesaver. PHILADELPHIA, July 23 /PRNewswire/ -- Independence Blue Cross (IBC) is taking its campaign for healthy living directly to the workers of Southeastern Pennsylvania -- for some of them, just in the nick of time. This program offers employer groups a variety of health-related and educational resources developed and delivered by a skilled staff of Certified Health Educators, Registered Nurses and other Health Professionals who design wellness programs specific to each respective employer group. Programs include preventive health screenings for blood pressure, body composition, cholesterol, blood glucose, and much more.

Wellness Partners also offers over 30 awareness programs, delivered by IBC's Health Educators, on topics including Stress Management, Healthy Hearts, and Diabetes Awareness. For employer groups that may not have enough time to attend the health seminars, Wellness Partners offers a choice of over 50 health-related, free videos, in both Spanish and English, as part of its videotape lending library. Wellness Partners additionally delivers Lifestyle Change Programs to those who are interested in behavior modification. Smoking Cessation, Living Lean Weight Reduction, and Time Management are three such results-oriented programs directed towards positive change.   Return To
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ALLIANCE URGES HOUSE PANEL TO APPROVE MED MALPRACTICE BILL

Washington, DC -- The Alliance of American Insurers is urging the U.S. House Judiciary Committee to approve the Health Efficient, Accessible, Low Cost, Timely Health Care (HEALTH) Act of 2002 (HR 4600). The bill is scheduled for markup July 23 at 10:00 a.m. in room 2141 of the Rayburn Building. "The HEALTH Act would greatly reduce the escalation of healthcare costs and the flight of medical professionals caused by the out-of-control spiral that medical malpractice litigation has entered in recent years," said Kenneth Schloman, Alliance Washington counsel. "This bill is similar to a California law that has already proved itself successful - even in what is one of our country's most litigious states. "We're hopeful that the Judiciary Committee will approve the bill and move it forward to the Energy Committee, which also has jurisdiction."

The HEALTH Act's purpose is to improve consumer access to healthcare services while reducing the adverse effects that the ever-growing number of malpractice suits is having on the medical industry. According to Sarah White, Alliance policy manager, "Recent published reports from Jury Verdict Research clearly show skyrocketing malpractice awards. Between 1994 and 2000, the average medical malpractice award increased 175 percent - from $362,000 to $1 million. The median award for childbirth malpractice awards was $2.05 million; for failure to diagnosis the median award was $750,000; and for medication cases it was $668,000. This is clearly driving up healthcare costs and creating a shortage of doctors in specialties, like obstetrics, that are particularly vulnerable to these kinds of suits."   Return To
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A.M. BEST REVISES RATING OUTLOOK ON CONSECO VARIABLE INSURANCE COMPANY

OLDWICK, N.J.--(BUSINESS WIRE)--July 19, 2002--A.M. Best Co. has revised the under review implications for the B++ (Very Good) financial strength rating of Conseco Variable Insurance Company, Amarillo, Texas, to positive from negative following the announcement by Conseco, Inc. of its agreement to sell the company to Inviva, Inc. Inviva, Inc. is the holding company for The American Life Insurance Company of New York (ALNY), a New York domiciled life and annuity company currently rated A- (Excellent) by A.M. Best.

ALNY's financial strength rating, which was recently affirmed, remains unchanged; the outlook for the rating is stable. ALNY is headquartered in New York City and has substantial operations in Louisville, Kentucky. CVIC's financial strength rating was downgraded to B++ from A- on July 12, 2002 in conjunction with rating actions on Conseco's primary insurance subsidiaries. CVIC's rating will remain under review pending finalization of funding for the transaction as well as regulatory approval and close.

The acquisition includes approximately 90,000 in force policies and over $2.25 billion in assets, comprising approximately $1.4 billion in variable annuity account value and over $800 million in general account liabilities, predominantly fixed annuities. This business will be converted to inviva's operating platform, which is expected to enhance the block's profitability due to the acquiring company's low cost structure. The acquisition will give inviva access to CVIC's independent broker/dealer distribution channel with over 300 broker/dealers, 1,800 registered representatives, as well as a suite of highly competitive products. Additionally, CVIC is licensed in all states except New York and adds significant scale to inviva's asset portfolio; the increased asset base is expected to generate economies of scale and greater profitability, and in turn support stronger crediting rates on fixed annuities.   Return To
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HIGH RX PRICES SUPPORT PROFITS, ADS, MARKETING

U.S. pharmaceutical companies that market the 50 most prescribed drugs spent more than twice as much last year on marketing, advertising and administration as they did on developing new drugs, new study results show. 

Released by consumer health organization Families USA, the study found that nine drug makers spent a total of $45.4 billion on promotion and administration in 2001, compared to $19.1 billion spent on research and development (R&D). Further, the nine drug companies reported some $30.6 billion in profit during the same period. Merck, for example, amassed three times as much in profits as it spent on R&D for the year. 

The findings contrast with President Bush's and drug companies' claims that fast-rising drug prices are needed to support R&D. However, officials at the Pharmaceutical Research and Manufacturers of America (PhRMA) disputed the study, saying it relies on “WorldCom accounting” to reach its conclusion. “Last year, PhRMA member companies spent $30.3 billion on new drug research and development,” stated Richard I. Smith, vice president of policy and research at PhRMA. “In contrast, according to IMS Health, the industry spent about $9 billion on promotion to consumers and doctors and about $10 billion on free drug samples.” 

"The drug industry should stop scaring America's seniors with false claims that drug price moderation will prevent research on new medicines," says Families USA Director Ron Pollack. "In light of huge industry profits and big marketing budgets, those claims are both irresponsible and wrong." 

For the full report, visit www.familiesusa.org.   Return To
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AETNA LAUNCHES NEXT GENERATION IN AETNA HEALTHFUND(TM) FAMILY OF PRODUCTS

HARTFORD, Conn., July 11 /PRNewswire-FirstCall/ -- In another step aimed at meeting consumer demand for greater choice, control and affordability in directing their health benefits, Aetna today announced the second generation in its Aetna HealthFund family of consumer-directed products - the first fully insured product from a national health plan targeting the specific needs of middle market customers. Aetna HealthFund offers the comprehensive coverage of a traditional health plan, plus a unique health fund benefit which allows members to choose the covered medical services they want from their choice of health care professionals. This plan also provides first-dollar coverage for preventive services, such as annual physicals, mammograms and well-child care, not subject to the annual deductible or deducted from the health fund. In addition, any unused dollars in the fund can be carried over to provide additional plan coverage the following year. The fully insured plan also offers a wide variety of deductible and coinsurance options to provide additional flexibility in health benefits to employers with as few as 51 eligible employees. Aetna first launched a self-insured Aetna HealthFund product in September 2001 for large national employers. Members of Aetna HealthFund receive a unique health fund benefit that can range from $250 (individual) to $1,000 (family), with members controlling how those dollars are spent on covered services. If the member uses all available dollars in their health fund, they must then meet the deductible before receiving additional coverage under the benefit plan. Information about Aetna is available a http://www.aetna.com.   Return To
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HMOS HIRE TALENT AGENCY TO PROMOTE HEALTHY IMAGE

LOS ANGELES, July 9 (Reuters) - Stung by their unflattering portrayal in a string of Hollywood movies, U.S. health insurers on Tuesday said they hired a talent agency to give them a healthier image. The American Association of Health Plans, which represents all major health insurers and HMOs, including Aetna Inc., Cigna Corp. and UnitedHealth Group said it has selected the William Morris Agency to "build a bridge to Hollywood." Earlier this year, blindsided by the portrayal of medical professionals as profit-driven and uncaring in the Denzel Washington-headlined "John Q," the trade group rolled out an ad campaign aimed at focusing the spotlight on the need for federal policy to assist the uninsured and those like the movie's everyman hero. The health plan association said it hired the agency's consulting division to leverage the power and influence of the entertainment industry to bring health care issues to the forefront of the American public. The two said they will work to create a dialogue between Washington's public policy experts and Hollywood's producers, writers and directors about health care issues. The AAHP said will also provide them with access to medical experts.  Return To
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PENNSYLVANIA ASKS INSURERS TO EXPLAIN SURPLUSES
Independence Blue Cross of Phila. and three other firms were summoned to a meeting in September.
By L. Stuart Ditzen
Inquirer Staff Writer

The Pennsylvania insurance commissioner has asked Independence Blue Cross of Philadelphia and three other Blue Cross companies to explain the size and growth of their cash surpluses at a time when consumers are facing soaring premium rates. The nonprofit Blue Cross and Blue Shield firms, which provide health insurance to more than half the population of Pennsylvania, have accumulated surpluses far exceeding legal requirements. At the same time, subscribers' premium rates are rising rapidly and doctors are complaining of low reimbursements.

Insurance Commissioner M. Diane Koken sent a letter this month to G. Fred DiBona Jr., president and chief executive officer of Independence Blue Cross, asking him to provide detailed information on his company's surplus at a public hearing in September. Koken sent similar letters to three other Blues: Highmark of Camp Hill and Pittsburgh; Capital Blue Cross of Harrisburg; and Blue Cross of Northeastern Pennsylvania of Wilkes-Barre. Independence Blue Cross, which contends its surplus is not excessive, issued a statement yesterday saying a public hearing would provide an "opportunity to correct the misinformation and misimpression that have circulated in recent months." The statement did not elaborate.

The four Blue Cross companies are required by Insurance Department formulas to maintain minimum surpluses that total, collectively, slightly more than $1 billion. According to recent financial statements, the companies have accumulated nearly four times that amount - $2.7 billion more than the minimum requirements. The largest of the four companies, Highmark, has $1.6 billion more in surplus than the Insurance Department requires. Independence Blue Cross reported surplus of $689.6 million in its 2001 financial statement - $308 million more than the minimum requirement. Independence Blue Cross contends that a trade organization, the Blue Cross and Blue Shield Association, mandates that it keep the larger reserve. Several class-action lawsuits have been filed around the state seeking to force the Blues to "disgorge" excess surpluses and redistribute the money to subscribers, who have seen health-insurance rates soar 10 to 15 percent a year. The cost of health insurance for some families now exceeds $10,000 a year.

A group of legislators last month introduced proposals to impose restrictions and greater scrutiny on the Blues. Executives of the companies have argued that large surpluses are good business. If there is a crisis or an unexpected wave of claims, they say, the surpluses provide the money to meet the need. In her letter to DiBona, Koken asked that IBC representatives appear at a public hearing tentatively scheduled for Sept. 4 or 5 to discuss:

The size and recent growth of the company's surplus.

The IBC's plans for use of the money.

The need for the surplus.

The "appropriate surplus levels for your operation."

Whether surplus funds should be redistributed to policy holders or used to increase reimbursements to doctors and other health-care providers.

Koken said in a brief interview yesterday that the rising cost of health insurance for Pennsylvanians was a "critical concern" to her. She said it was equally important that health insurers maintain adequate revenues and that surpluses above mandated minimums were not necessarily excessive. The Blues, formed during the 1930s, were intended to be insurers of last resort for people struggling through the Depression. Unlike for-profit insurance companies, the companies are not required to pay state tax on premium payments they receive from subscribers. Critics contend that the Blues, while enjoying their nonprofit status, are not doing enough to help some of the estimated 1.1 million people in Pennsylvania who are uninsured. "That's a question we intend to ask them," said Insurance Department spokeswoman Roseanne Placey. "What are you doing with your surplus with regard to your social mission?" Sam Marshall, president of the Insurance Federation of Pennsylvania, which represents for-profit insurers, praised Koken's decision to hold a hearing. "It's a legitimate public debate," Marshall said. "I'm heartened to see that the focus is not just the size of the surplus; it's a focus on social mission."

Contact L. Stuart Ditzen at 215-854-2431 or sditzen@phillynews.com.  Return To
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FIRST FEDERAL SAVINGS BANK ACQUIRES EXCHANGE UNDERWRITERS, PITTSBURGH-AREA INSURANCE AGENCY

CONCORD, Mass., June 27, 2002-First Federal Savings Bank, in Monessen, Penn., recently purchased a majority ownership in Exchange Underwriters, Inc., an insurance agency in Canonsburg, a suburb of Pittsburgh. Terms of the acquisition were not disclosed. Founded in 1952, Exchange Underwriters offers a full line of personal and business insurance, including auto, homeowners, general liability, workers' compensation and bonds. First Federal, founded in 1922, has $300 million in assets and seven offices in Washington, Westmoreland and Fayette Counties. This is bank's first venture into property-casualty insurance.  Return To
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PA INSURANCE DEPARTMENT TAKES ACTION AGAINST UNITRIN INSURANCE GROUP FOR USING RACE-BASED PRICING

HARRISBURG, Pa., July 9 /PRNewswire/ -- Pennsylvania Insurance Commissioner M. Diane Koken today announced that the Insurance Department has signed a settlement order against Illinois-based Unitrin Insurance Group for selling life insurance policies using race-based pricing. "As a result of our action, as many as 5,200 beneficiaries and policyholders in Pennsylvania now are eligible to receive their share of $462,000 in settlement benefits," Koken said. "In addition, the company will be paying a regulatory fine. "We took this action to see that insurance consumers in Pennsylvania are treated fairly and respectfully. This is just one more step in the process of correcting any unfair and discriminatory practices."

Known as industrial life or burial insurance contracts, these policies were sold to African-Americans at a higher premium than those sold to white customers. Most of these policies were sold before 1970, but information provided in an audit revealed race-based premiums still are being collected today. The Insurance Department determined this pricing practice is in direct violation of Pennsylvania's Unfair Insurance Practices Act of 1974. The Insurance Department's settlement order includes the United Insurance Company of America, Union National Insurance Co. and The Reliable Insurance Company, which are affiliates of Unitrin. This settlement is in conjunction with a national settlement between 44 jurisdictions and the Unitrin Insurance Group over charges of racially discriminatory rating practices in the sale of life insurance.

While Unitrin already has identified approximately 5,200 Pennsylvania residents who own, or owned, policies affected by the old rating practices, other policyholders and beneficiaries not identified by Unitrin also may qualify for benefits. If a consumer can show they have owned affected policies, or that they are the heirs or beneficiaries of owners of affected policies, they should contact the company at 1-877-347-4719. The consumer should have available the policy number and benefit statement when calling.  Return To
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HEALTH CARE BACK ON PUBLIC'S FRONT BURNER, POLLSTERS SAY
By James Kuhnhenn, Philadelphia Inquirer Washington Bureau

WASHINGTON - Almost 10 years after President Bill Clinton tried to overhaul the nation's health-care system, the American people appear ready to try again. The plight of the uninsured is edging back into political consciousness, say lawmakers, lobbyists and pollsters, creating fertile ground for a new push toward universal health insurance. "Ever since the economy started turning down, concern about paying for the costs of health and covering the uninsured has been going up," said Whit Ayres, a Republican pollster. After years of fearing that grand health-care plans would collapse just as Clinton's did in 1994, supporters of a major health-care role for government sense a new opportunity. The new public attitude is bound to cause a clash between Democrats, who favor expanding and broadening government health programs, and Republicans, who prefer private-sector solutions.

Democrats, who had abandoned plans for an ambitious health-care restructuring, are reassessing their strategy of tackling health-care issues in small bites. Those efforts, most notably prescription-drug benefits for seniors and patient-friendly HMOs, have led to huge partisan rows in Congress but no real solutions to help Americans get affordable access to doctors and medicines. "You have to address cost, access and quality from a comprehensive point of view," Senate Majority Leader Tom Daschle (D., S.D.) said recently. "And while we failed 10 years ago, I think you could say we failed in the 10 years since to deal with these issues incrementally. There isn't any outstanding success story to talk about." Republicans concede the public is worried about insurance and skyrocketing costs, but argue that Democratic solutions would end up raiding the federal treasury. "It's always been about affordability and accessibility," said Rep. Thomas M. Davis 3d (R., Va.), who heads the party's congressional campaign committee. "But there's only so much money to go around."

Sen. Edward M. Kennedy (D., Mass.) took the lead for Democrats last month in a speech at the National Press Club, calling for a federal plan to provide affordable health insurance to every American. Outside Washington, Vermont Gov. Howard Dean, another Democrat, is campaigning for the presidency on the strength of a health-care plan similar to Vermont's to cover practically everyone under age 22. Health-industry officials say issues such as the "patients' bill of rights" - legislation designed to protect the insured against managed-care abuses that has stalled amid differences between the House and Senate bills - were popular when the economy was booming. But the more recent economic sputtering has focused the public on a more basic fear - lack of health-care coverage. "People are just realizing that the health-care debate we've been having for the past five years is basically over," said Mark Merritt, lead strategist for the American Association of Health Plans, which represents HMOs. "The era of viewing costly mandates and unlimited liability as a solution is over."

Ron Pollack, executive director of the consumer-advocacy group Families USA, attributed the change to a confluence of four developments: Rising unemployment means more people are losing their health coverage; employers are passing on more health-care costs to their workers; such costs are rising annually at double-digit rates; and economically strapped states are cutting back Medicaid for the poor. "We're experiencing a perfect storm with respect to insurance coverage," Pollack said. "All those things contribute mightily to the number of people who are uninsured." The new direction - away from incremental measures and toward more ambitious goals such as universal coverage - is politically significant, as Republicans and Democrats struggle for control of Congress in November's elections. Health care could compete with President Bush's war on terrorism for voters' attention. Ayres detected the new trend in public sentiment in a nationwide poll of 1,000 people he conducted March 18-20. He was struck by the response to the question: Would you like to see a government-owned, government-run health-care system in America? Forty percent of the respondents said yes. "It's a little higher than I expected," Ayres said. The poll had a margin of error of 3 percentage points.

Rising medical costs also are driving public opinion. Health-insurance officials argue that mandated benefits, such as cancer screening, help boost the cost of insurance. Drug companies say research and regulatory costs drive up the expense of pharmaceuticals. "The primary reason almost 40 million Americans are uninsured is the high cost of health care and health-care coverage," Donald A. Young, president of the Health Insurance Association of America, testified last month before Congress.

So far Washington has proved incapable of doing much to relieve rising prices. Lawmakers call for subsidizing prescription costs for seniors, but no law is likely this year because Republicans and Democrats are deeply divided over how to do it. "The focus clearly has got to be on keeping health care affordable and solving the problems of the uninsured," said Merritt of the American Association of Health Plans. "There are a lot of different ways to get there. Right now, you're just seeing the tip of the iceberg." All this comes as debate on narrower health-care issues heats up in Washington. Last week, the House passed a plan for a $350 billion Medicare prescription-drug subsidy for seniors. The measure has yet to be taken up by the Senate and few lawmakers think they will reach compromise this year on a prescription plan or a patients' bill of rights. Both seem destined to be fodder for the campaign trail.

Some leading lawmakers think Congress must get past the prescription-drug debate before it can tackle the bigger issue of the uninsured. Older Americans are one of the most dependable voting blocs in the country, and politicians want to secure their support. "Prescription drugs right now seems a more immediate and visible issue, frankly, than the uninsured," said Sen. John McCain (R., Ariz.), whose state is home to many retirees. "Maybe that's not fair. But you have seniors pounding on you all the time that they can't afford their prescription drugs." When it comes to helping the uninsured, Republicans tend to favor tax breaks as incentives to market forces, while Democrats time and again have fractured their ranks in debates over more aggressive solutions. Some argue for a comprehensive government program. Others want to mandate employers to cover their workers. Still others want to expand existing programs, such as Medicaid, to reach more Americans. Contact James Kuhnhenn at 202-383-6018 or jkuhnhenn@krwashington.com.   Return To
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BANKERS FIDELITY LIFE ANNOUNCES NEW PRESCRIPTION DRUG CARD PROGRAM FOR POLICYHOLDERS

ATLANTA, July 8 /PRNewswire-FirstCall/ -- Bankers Fidelity Life Insurance Company, a subsidiary of Atlantic American Corporation, announced today that it will distribute at no cost to its policyholders a new prescription drug discount card program called "Senior SecuRxity." The "Senior SecuRxity" card will be provided in cooperation with Alliance HealthCard. The "Senior SecuRxity" card entitles Bankers Fidelity Life policyholders to a discount on their prescription drug purchases throughout Alliance's network of more than 50,000 pharmacies nationwide.  Return To
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2003 HMO RATES TO INCREASE AN AVERAGE OF 17%

Milliman USA Survey Data Details High Trends and Variation in the Market. SEATLLE--(BUSINESS WIRE)--July 1, 2002--Preliminary results from Milliman USA's eleventh annual HMO Intercompany Rate Survey indicate continuing double-digit rate increases into 2003. The 2003 expected increase, if implemented, would be the largest annual increase in the eleven year history of Milliman's survey. Increases of this magnitude are likely to prompt the development of consumer driven approaches to health care and to accelerate the movement of cost sharing to employees as employers seek to reduce their health benefit costs.

One hundred of the four hundred HMOs that serve the commercial employer market responded to the Milliman USA flash survey, which asked for the anticipated rate increase for January 2003 renewals. Over 95% of those responding expected increases over 10%, with more than 70% indicating increases would be over 15%. These increases reflect increased provider expenses and rising consumer demand.

"If it holds, this 2003 increase will mark the third year in a row of double digit increases. We would need to look back to the mid-1990s to find a time when HMO rates increased by less than the general inflation rate," notes Steve Cigich, author of the Milliman USA annual survey. "Increases of this level cannot be sustained without significant reaction in the marketplace. I look for employers to increase employee responsibility regarding health care financial decisions. In addition to shifting more of the premium responsibility to employees and a continuation of increases in copayments a continued emergence of personal spending accounts is likely to occur to help employees bear this increased burden." Regional results varied narrowly around the 17% national average. Regional increases are expected to range from a low of 14% in the East North Central region to a high of 19% in the Mountain, South Atlantic, and West South Central regions.  Return To
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PENNSYLVANIA INSURANCE DEPARTMENT ENROLLS 6,000 PENNSYLVANIANS FOR ADULTBASIC IN FIRST MONTH

Landmark Insurance Plan Provides Health Coverage For Uninsured Adults. HARRISBURG, Pa., July 2 /PRNewswire/ -- On behalf of Pennsylvania Gov. Mark Schweiker, Pennsylvania Insurance Commissioner M. Diane Koken today announced that adultBasic, the state's landmark health-insurance program for uninsured adults, has enrolled 6,000 adults in the first month of the program.

"We're extremely pleased that Pennsylvania's adults are turning to adultBasic for help during a time in their lives when they have no other access to health insurance," Commissioner Koken said. "With the leadership of Gov. Schweiker and his commitment to using every dime of Pennsylvania's National Tobacco Settlement on health care, Pennsylvania is well on its way to becoming the healthiest it has ever been." More than $76 million from the National Tobacco Settlement will be spent on adultBasic in the first year alone to insure more than 40,000 Pennsylvanians. Pennsylvania is one of only eight states to use all of the funding it receives from the tobacco settlement solely for health-related programs.

AdultBasic provides basic health insurance to Pennsylvanians age 19 through 64 who: have incomes below 200 percent of the Federal Poverty Guidelines (approximately $17,000 for a single adult); jobs that do not include health benefits; or are unemployed. Coverage, which is offered through private insurance companies, includes physician services, diagnosis and treatment of illness and injury, preventative care, inpatient hospitalization/outpatient services, and emergency accident and emergency medical care.

The cost is $30 a month and modest co-pays for certain benefits are required (Doctor Visit -- $5; Specialists -- $10; Emergency Room -- $25 -- waived if admission occurs). AdultBasic operates through the following network of health-insurance providers: -- First Priority Health (Northeast): 1-800-KIDS-199 (1-800-543-7199); -- Capital Blue Cross/PA Blue Shield: 1-800-KIDS-101 (1-800-543-7101); -- Highmark/Western Caring Foundation: 1-800-KIDS-105 (1-800-543-7105); and -- Keystone Health Plan East: 1-800-464-KIDS (1-800-464-5437).

Enrollment began June 1, and applications are still being accepted. The toll-free number for applications and information is 1-800-GO-BASIC. Applications also may be submitted via the Internet using COMPASS, the Commonwealth of Pennsylvania Application for Social Services. COMPASS can be accessed through the PA PowerPort at www.state.pa.us,  PA Keyword: "adultBasic." CONTACT: Rosanne Placey or Andres Vazquez of the Pennsylvania Insurance Department, +1-717-787-3289.  Return To
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THE ENRON THEORY

For Those Who Can't Understand The Enron Case. This is put in the simplest form so that every one can understand. An old country farmer with serious financial problems bought a mule from another old farmer for $100, who agreed to deliver the mule the next day. However, the next day he drove up and said, "Sorry, but I have some bad news: The mule died." "Well, then, just give me my money back." "Can't do that. I went and spent it already." "OK, then. Just unload the mule." "What ya gonna do with a dead mule?" "I'm going to raffle him off." "You can't raffle off a dead mule!" "Sure I can. I just won't tell anybody he's dead." A month later the two met up and the farmer who sold the mule asked, "Whatever happened with that dead mule?" "I raffled him off just like I said I would. I sold 500 tickets at $2 a piece and made a profit of $898." "Didn't anyone complain?" "Just the guy who won. So I gave him his two dollars back."  Return To
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S&P COMMENTS ON ANTHEM PROPOSED ACQUISITION OF TRIGON

NEW YORK, June 25 - Standard & Poor's said today it views Anthem Inc.'s proposed acquisition of Trigon Healthcare Inc. as favorable to Anthem's financial flexibility and debt service capacity and expects to raise the company's rating one notch to triple-'B'-plus upon completion of the acquisition. Anthem's pro forma 2003 interest coverage is projected at 8 times and debt-to-total capital, 23%, incorporating Trigon. Financial leverage and interest coverage are considered strong. Trigon has extremely strong operating performance and will prospectively provide Anthem with additional cash and enhance Anthem's debt service capacity.  Return To
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NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS REPUDIATES ANNUAL REUNDERWRITING

A committee of the National Association of Insurance Commissioners yesterday "repudiated" the practice of annually reunderwriting individual health insurance policies in response to concerns that "states would be unprepared to protect consumers from being singled out for rate increases based on their health," the Wall Street Journal reports. The committee also dropped the practice as a "possible solution to soaring health insurance rates." Steven Larsen, head of the NAIC committee on health insurance and managed care, called reunderwriting "fundamentally unfair" and said that the committee plans to send a letter to state insurance officials nationwide "urging them to reexamine their laws regarding such a practice." Indiana Insurance Commissioner Sally McCarty said that reunderwriting "seems to fly in the face of the basic premise of insurance, which is to share the risk." However, according to supporters of reunderwriting, the practice "limits rate increases for the healthie! st customers and encourages them to remain insured" and helps "keep rates lower for sicker policyholders" in the long term. Most states and the federal government do not have laws that prohibit reunderwriting, Sen. Bob Graham (D-Fla.) this summer plans to introduce legislation to ban the practice (Terhune, Wall Street Journal, 6/12).   Return To
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AON SURVEY: HEALTH CARE COSTS WILL CONTINUE DOUBLE-DIGIT INCREASES

HMOs Trend Higher than POS, PPO Plans, According to Major Health Care Providers. CHICAGO--(BUSINESS WIRE)--June 25, 2002--Companies will continue to face health care cost increases in the double-digits, according to an Aon survey of major health care providers. The forecast, released today, may serve as a call-to-action for companies to more efficiently spend their health care dollars.

Based on data provided by the nation's largest medical, dental, Pharmacy Benefit Manager (PBM) and vision vendors, Aon has found that HMOs (Health Maintenance Organizations) are expected to raise costs, on average, 16.2 percent for 2003 renewals. This marks a continuing shift in the landscape of health care plans - HMOs historically have not shown the increases of other types of plans, such as PPO (Preferred Provider Organizations) and POS (Point Of Service) plans.

"The HMO may still be the best option for some organizations," said Bill Sharon, senior vice president with Aon Consulting. "However, as they are negotiating with carriers, companies need to be certain that they are looking at a variety of options to provide the best and most cost-effective coverage for their employees."

In brief, the forecast for medical plan increases is as follows: -- HMO: With Prescription drugs (Rx) - 16.2 percent, Without Rx - 14.6 percent. -- POS: With Rx - 16.0 percent, Without - 14.6 percent. -- PPO: With Rx - 16.0 percent, Without - 14.5 percent. -- Indemnity: With Rx - 18.3 percent, Without - 17.1 percent.. --

The Aon study also found that pharmacy plans are expected to rise at a 17.8 percent clip. Dental plans all fall below 10 percent, with Dental HMOs only expected to increase by 4.4 percent. Vision plans are forecast to rise 3.2 percent. Twice a year, Aon surveys major providers of medical, dental, pharmacy and vision plans. Figures provided by the companies are aggregated and represent national averages as forecast by Aon. Results of specific companies may vary. The study is available at www.aon.com.  Return To
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HEALTH COVERAGE PRESCRIPTION

Vermont Governor Howard Dean, a physician with presidential aspirations, blames the public for the nation's healthcare problems..."The reason healthcare costs are going up as fast as they are is we want everything that can be done for us and for our loved ones and we want someone else to pay the bill." Dean advocates universal healthcare for children through age 22, adding a prescription-drug benefit to Medicare and, for everyone in between, maintaining the current employer-based system, but adding subsidies to help those without employer-provided coverage. He also advocates higher deductibles and co-payments to "reconnect patients with the cost" of healthcare.  Return To
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HUMANA FOR INDIVIDUALS

Humana has announced the availability of a health plan for individuals. The new plan marks the company's first large-scale venture into the individual health insurance arena. The plan is now being offered in Illinois and Ohio, via independent insurance agents and directly to consumers. Other markets will follow later this year and next.  Return To
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PA HOSPITALS HAIL REPEAL OF JOINT AND SEVERAL LIABILITY

HAP: Bill Will Bring Fairness, Balance, Stability to Liability Insurance System. HARRISBURG, Pa., June 13 /PRNewswire/ -- The Hospital & Healthsystem Association of Pennsylvania (HAP) today hailed Senate passage of the "Fair Share Act," a compromise bill which abolishes joint and several liability for any defendant found to be less than 60 percent liable for causing an injury. "This bill is a common-sense measure that maintains a plaintiff's right to collect damages while bringing fairness, balance, and stability to Pennsylvania's liability insurance system," said Carolyn F. Scanlan, president and CEO of HAP. "This critical reform will help to keep doctors practicing, hospital services open, and patients healthy.

In its current form, the legal concept of joint and several liability holds each defendant in a lawsuit financially liable for the full amount of a damage award, even if the defendant's legal responsibility is deemed to be minimal. "Joint and several liability is inherently unfair to hospitals and physicians," Scanlan said. "It results in needless lawsuits because personal injury lawyers seek to sue those who were only remotely involved."

Scanlan said that, with this critical change, insurers will be more willing to do business in Pennsylvania. "We expect that enactment of the Fair Share Act will spare many health care providers the difficult decision to divert patient care resources to pay exorbitant insurance premiums, or cut services," Scanlan said. Pennsylvania hospitals are estimated to be paying more than $180 million in additional premiums for medical liability insurance compared to one year ago, according to a statewide survey of medical professional liability coverage released by HAP in May.  Return To
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SC BECOMES 7TH STATE THIS YEAR TO ENACT PRODUCER LICENSING REFORM

Columbia, SC -- South Carolina today became the seventh state this year to enact producer licensing reform, according to the Alliance of American Insurers."The new South Carolina law (HB 4096) was signed into law earlier today by Gov. James Hodges (D). It closely tracks the National Association of Insurance Commissioners' (NAIC) model act and will dramatically improve administration of producer licensing in the state," said Robert Herlong (rherlong@allianceai.org), vice president of the Alliance's Southeast Region. "We view this as a very positive development." In addition to South Carolina, so far this year, Massachusetts, Michigan, Ohio, Tennessee, Vermont and West Virginia have enacted similar producer licensing reform legislation.
"A total of 41 states now have enacted new producer licensing laws since the federal Gramm-Leach-Bliley Act was passed in Congress," said Lisa Thurbush (lthurbush@allianceai.org), a policy manager in the Alliance's property/casualty department. "Another four states: Georgia, Montana, Texas and Washington have enacted reciprocity language only."While we already have surpassed the federally mandated number of 29 states needed to pass producer licensing reform, final action in these states moves us even closer to the Alliance's eventual goal of obtaining reform in all 50 states," she said.  Return To
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DESPITE COST CONCERNS, PATIENTS SUPPORT HEALTH COVERAGE

While four in 10 families (44%) report at least one problem accessing health care, paying medical bills or obtaining quality treatment in the previous year, the majority support the current employment-based system and aren’t ready to select and purchase coverage on their own, according to a new poll. 

Some 20% say the current health care system works well and needs only minor changes, while 57% said there are some good things about it but major changes are needed, according to the survey of 1,200 people sponsored by the Kaiser Family Foundation, National Public Radio and Harvard University. Twenty-three percent say there is so much wrong with the current system that it should be completely rebuilt. 

Large majorities of those with employment-based coverage say employers add value to the system. Respondents believe that purchasing health insurance on their own would make it harder to get a good price (78%), find and keep insurance when they’re sick (75%), handle administrative issues (66%) and find a high quality plan (65%). 

“People are apprehensive about their ability to make these decisions,” comments Molly Ann Brodie, vice president and director of research at KFF. “Employers should be aware of these anxieties and concerns when they evaluate possible new models of coverage.”  Return To
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MINNESOTA USES PENNSYLVANIA'S APPROACH: BLUE CROSS RECEIVES GREEN LIGHT ON $412 MILLION HEALTH INVESTMENT INITIATIVE

EAGAN, Minn., June 5 /PRNewswi re/ -- Blue Cross and Blue Shield of Minnesota received approval from the Minnesota Department of Commerce today for its $412 million health investment. The plan will give Minnesota children a better chance to grow up healthy, reduce premiums for many Minnesota businesses, provide cost relief for qualified Blue Cross members, and slow the rate of increase in heath care costs by making people healthier. Blue Cross' initiative -- called A Healthier Minnesota -- will be funded entirely from the money tobacco companies are paying to Blue Cross as a result of the health plan's groundbreaking lawsuit against the tobacco industry. The initiative will be funded at no cost to taxpayers, Blue Cross subscribers or any other Minnesotan. It has received broad support from health care professionals, businesses, and community organizations.  Return To
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REGION'S HOSPITAL S APPLAUD PENNSYLVANIA HOUSE FOR PASSAGE OF INSURANCE REFORM

WARRENDALE, Pa., June 5 /PRNewswire/ -- Hospitals and physicians in western Pennsylvania and across the state applaud last evening's passage of the "Fair Share Act" by the House of Representatives. The Act reforms rules which will result in lower medical liability insurance for physicians and hospitals. "Hospital Council of Western Pennsylvania applauds the efforts of the House of Representatives to pass the Fair Share Act," said Ian G. Rawson, Ph.D., president of Hospital Council. "This Act, coupled with the previous passage of Act 13, will help maintain access to care by lowering the costs of medical liability insurance for hospitals and physicians."

The "Fair Share Act" essentially changes Pennsylvania's "joint and several" liability rules by holding defendants in lawsuits responsible for only a portion of damages. Under the current system, if two or more parties are found negligent in a lawsuit, one party may be forced to pay the entire judgment if the other party does not have the funds to pay. Hospitals and physicians have faced dramatic increases in medical liability costs the past few years. "These increases have caused physicians to leave the state, while some have retired earlier than expected," Rawson said. "At th e same time, hospitals are having a difficult time attracting physicians to western Pennsylvania because of these high premiums. This ultimately impacts access to care for western Pennsylvanians." Although hospitals and physicians applaud the passage of the Fair Share Act, reform cannot take place unless the Pennsylvania Senate also takes action. "This is a critical step for Pennsylvania's health care system," Rawson said. "We urge the Senate to pass Senate Bill 1089." If the Senate concurs, Pennsylvania would then join 35 other states which have implemented similar reforms.  Return To
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DELTA DENTAL INSURANCE COMPANY SURPASSES ONE MILLION ENROLLEES

IRVING, Texas--(BW HealthWire)--June 6, 2002--Delta Dental Insurance Company today reported surpassing one million dental health plan enrollees, a 13-percent increase over the prior year's enrollment and its sixth consecutiv e year of double-digit enrollment growth. Combined total enrollment in DeltaPremier, the company's traditional fee-for-service program, and in DeltaPreferred Option, its dental PPO, has doubled in the past five years from 541,000 in 1997 to 1.08 million as of January 1, 2002, including 465,000 in Texas. In addition, another 54,000 are enrolled in DeltaCare, a dental HMO program administered in Texas by Alpha Dental Programs, Inc. Last year alone, Delta Dental Insurance Company added 255,000 new fee-f or-service enrollees within its 10-state territory, including 158,000 in Texas. Company officials attribute this latest increase to the recent signing of several key large clients, high retention of existing customers and improved marketplace awareness of the Delta Dental brand and product line.  Return To
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HMO RATES CONTINUE TO RISE AT DOUBLE DIGIT PACE

Hewitt Data Shows U.S. Employers Contain Cost Increases Through Plan Design Changes and Higher Cost Sharing. June 2002 (Newstream) -- Preliminary 2003 HMO rates are averaging upwards of 20 percent, continuing a trend of double digit health care cost increases and forcing employers to share more of the costs with employees through cost sharing and plan design changes. This is according to new data from Hewitt Associates, a global outsourcing and consulting firm.

Organizations across the country are starting to negotiate health plan rates for 2003, and data from the Hewitt Health Resource (HHR) - a web site that captures HMO rate information on behalf of nearly 140 employers representing more than 1 million employees and annual premiums of nearly $4 billion - shows that initial HMO rates are averaging 22 percent, but ranging as high as 94 percent for next year(1). This is compared to the average HMO premium increase of 15.3 percent in 2002 (see graphic, which is available for download in Assets column on the right).

"We are seeing unprecedented HMO increases for 2003. With no clear solutions on the horizon we expect that it's going to get worse before it gets better," said Mindy Kairey, e-business leader for Hewitt's Health Management Practice. "Companies cannot afford these increases and will have to be even more aggressive in making plan design and employee contribution changes for next year. Unfortunately, this means consumers should expect to pay a lot more for health care."

As health care costs continue to escalate, organizations are altering their plan designs and passing more of the cost along to employees. For example, the number of companies with a $15 office co-pay more than doubled from 11 percent in 2001 to 24 percent in 2002. At the same time, employers offering $10 co-pays dropped from 64 percent in 2001 to 58 percent in 2002.

Employees are also being asked to pay more for prescription drugs. Specialty care office visit co-pays have increased as well, with 52 percent of companies using a $10 co-pay, up from 49 percent in 2000, and 25 percent using a $15 co-pay, up from 13 percent in 2001. The majority of organizations (60 percent) use a $50 co-pay for emergency room visits, while 14 percent use more than a $50 co-pay, doubling from only 7 percent in 2001.

Hewitt's data also indicated that employers are losing their negotiation leverage with health plans. Plans with 50 enrollees or fewer received the lowest HMO increases in 2002 with an average of 12.8 percent, while plans with more than 501 enrollees had 15.9 percent increases. "The days of health plans buying market share are over. This data shows that HMOs are standing strong in negotiations, regardless of the size of the contract," said Kairey. "If this continues, it will accelerate the movement to self-funded national HMOs, increase the interest in consumer-driven health plans, continue the erosion of HMO enrollment, and consolidate the number of health plans employers offer."  Return To
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ING SELLS FORTIS STAKE, BUYERS BET ON CONSOLIDATION

By Melanie Cheary AMSTERDAM, June 5 (Reuters) - Dutch financial group ING on Wednesday sold its 2.7 percent stake in rival Fortis for 808 million euros to institutional investors, which analysts said were betting on benefiting from a Fortis merger in the future. Banking and insurance group ING said it sold its 35.5 million shares in Benelux-based Fortis as part of a routine transaction to realise capital gains from investments and would book an operating profit of 235 million euros ($220 million). While the proceeds are a nice windfall for ING, analysts said the Netherlands' biggest financial company was not selling the shares because it needed the cash for an acquisition but rather because the stake no longer brought it tax advantages. Institutional investors interested in acquiring Fortis shares have probably bought them in the hope of making profit if Fortis, which has made no secret of its plan to participate in European financial sector consolidation, merges.  Return To
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FIFTY THOUSAND LOW-INCOME SENIORS WITHOUT DRUG COVERAGE JOIN LILLYANSWERS

INDIANAPOLIS--(BW HealthWire)--May 30, 2002--Eli Lilly and Company - A $12 flat fee and helpful information create strong demand as 250,000 customers nationwide seek information and applications for LillyAnswers(SM) in the first two months of operation. Eli Lilly and Company today announced that 50,000 low-income seniors without prescription drug coverage have joined the LillyAnswers Card Program in the two months since its launch on April 1, 2002. Additionally, more than 250,000 health care professionals and potential enrollees have called 1-877-RX-LILLY requesting enrollment applications and program information.

"The unique combination of important products for seniors, a low, consistent $12 fee and a straightforward enrollment process have contributed to the high level of demand for the LillyAnswers program," said Gino Santini, Lilly's president of U.S. sales and operations. The LillyAnswers Card Program allows low-income seniors and people with disabilities enrolled in Medicare without prescription drug coverage to pay a flat fee of $12 for a 30-day supply of any Lilly retail drug(1). Eligible participants can save an average of nearly $52 per 30-day prescription, or an average of $600 per year per medication under Lilly's $12 fee.(2)  Return To
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HOW HAS THE CONSOLIDATION THAT HAS TAKEN PLACE IN THE HOSPITAL INDUSTRY AFFECTED THE BALANCE OF POWER BETWEEN THE HMOS AND THE PROVIDERS?

67 WALL STREET, New York--June 3, 2002--The Wall Street Transcript has published an in-depth (14,800 words) interview with William McKeever, Managing Director at UBS Warburg, Joshua R. Raskin, Vice President and Senior Analyst in the Equity Research department at Lehman Brothers and John Szabo, Member of the equity research group covering healthcare services at CIBC World Market., which they examine the outlook for the sector and share specific stock recommendations. This interview is part of a 56-page Managed Care issue featuring three analysts and eight Managed Care sector CEO interviews and is available by telephoning 212-952-7433 or through The Wall Street Transcript. <http://twst.com/partner/yhoo564.htmReturn To
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MOODY'S CUTS CONSECO, WARNS OF BANKRUPTCY RISK

By Jonathan Stempel NEW YORK, May 28 (Reuters) - Moody's Investors Service on Tuesday cut Conseco Inc.'s debt ratings, and warned the struggling insurance and loan company may not avoid bankruptcy amid weak progress in generating cash and bolstering income. Moody's cut its ratings for Carmel, Indiana-based Conseco's older senior unsecured debt two notches to "Caa1," its fifth-lowest "junk" grade out of 11, from "B2." It also cut several other ratings. The downgrades, which ordinarily raise borrowing costs, affect about $5.6 billion of Conseco's debt.

"The typical definition of debt in the 'triple-C' category includes the possibility of a bankruptcy," said Julie Burke, a managing director at Fitch Ratings, which rates Conseco's old senior debt "CCC-plus," equal to Moody's new rating. "We have longer-term concerns about (Conseco's) operating performance. Earnings have been below our expectations, and asset sales can only take you so far." Conseco said on April 18 it exchanged $1.29 billion of bonds for new bonds with longer maturities, to ease its debt load and give it more time to turn around its business. It had hoped to exchange $2.54 billion of debt.

Moody's said Conseco's "slower than anticipated progress in generating cash from reinsurance and other transactions and its continued weak net income performance from its finance and insurance subsidiaries leads Moody's to believe that the possible risks of bankruptcy for Conseco are more problematic." Conseco shares closed Tuesday on the New York Stock Exchange at $3.10, down 13 cents. They have fallen 83 percent in the last year. The shares fell to $3.05 in after-hours trading according to Instinet. Its "distressed" 9 percent notes maturing in 2006 fell 5 cents on the dollar after the downgrade to 50 cents, a trader said, pushing their yield to 30.38 percent from 27.19 percent.

CEO WENDT BLASTS MOODY'S - The downgrade drew sharp criticism from Conseco's chief executive, Gary Wendt. He said in a press statement that Moody's downgrade was based on information between four weeks and two months old, that Conseco's cash-raising efforts are "on schedule," and that Moody's has no new basis on which to conclude that Conseco's operating performance is 'continued weak.'" "We take strong issue with the timing of and the language used to support today's rating action," Wendt said. "We are not spending our days worrying about whether or not we will remain a going concern."

Moody's analyst Patrick Finnegan did not immediately return calls seeking comment.

"MODEST" ADDED FLEXIBILITY - Wendt has been trying to turn around Conseco, which has struggled with a bloated debt load since acquiring loan company Green Tree Financial in 1998. In March he fired Chief Financial Officer Chuck Chokel, saying he wasn't up to the job. Moody's had said on March 18 it expected to cut its rating for Conseco's old senior debt only one notch to reflect that debt's subordination to the new debt Conseco issued. The rating agency said the debt restructuring "provides Conseco with modest added financial flexibility," yet said the "fragile economic environment" leaves Conseco's cash flow prospects uncertain. It said Conseco must make an optional $193 million bank payment in September in order to extend its bank facility to 2005. Otherwise, it said Conseco will have to pay off $1.8 billion of debt next year instead of $600 million. "We're fairly comfortable that Conseco can meet its scheduled debt maturities for 2002," said Burke of Fitch Ratings. "It does not have financing in place to meet its 2003 maturities." Standard & Poor's rates Conseco's senior debt "B," equivalent to Moody's "B2" rating, with a negative outlook.  Return To
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COLONIAL - PRINCIPAL FINANCIAL GROUP ALLIANCE WIDENS SUPPLEMENTAL BENEFITS DISTRIBUTION NETWORK

COLUMBIA, S.C. (May 28, 2002) - Colonial Supplemental Insurance has formed an alliance with the Principal Financial Group that could put Colonial products in the portfolio of 15,000 more independent brokers in 37 states. The alliance allows the Employee Benefits Sales and Service division of The Principal to promote Colonial’s newest hospital confinement indemnity, accident and critical illness products to its broker clients. Colonial will also offer its benefits communication and enrollment services to qualified accounts of these brokers.

The Principal already markets several supplemental products, including dental, group disability and group term life. The alliance with Colonial grew from brokers’ requests for additional product offerings. “The fastest and most efficient way to meet our customers’ needs was to establish a relationship with another provider that has already developed high-quality products,” said Mike Robinson, regional sales officer for the Employee Benefits Sales and Service division of The Principal. “Colonial is known throughout the industry as a leading supplemental insurance provider and a company we knew we could trust to help serve our customers.”

Rapidly rising health care costs also played a hand in creating the alliance, according to Frank Ferez, Colonial’s director of Major Accounts and National Strategic Alliances. “The Principal has introduced a group major medical insurance design with higher deductibles to help combat the recent jump in health care premiums. Colonial’s new Medical BridgeSM hospital confinement indemnity plan fits perfectly with this type of plan because it helps employees bridge the gaps in coverage and out-of-pocket expenses.”
Medical BridgeSM supplements existing major medical coverage by helping employees pay the medical and nonmedical expenses associated with a hospital stay or outpatient surgery. These expenses may include deductibles, copayments, child care or transportation to or from the hospital. Through the alliance, Colonial will be able to provide its products and services to both new and existing clients of The Principal. “This alliance will help more employers and employees get easier access to the benefits they need and want,” Ferez said. For more information about Colonial’s products and services or opportunities with the company, call (803) 798-7000 or visit www.coloniallife.comReturn To
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COSTS OF GROUP HEALTH PLANS AND MEDICAL BENEFITS RISING

Data Released from The Council's First Employee Benefits Market Survey. WASHINGTON - Group health plans and other medical-related benefits are becoming so expensive that employers are actively seeking ways to cut back on the coverage they offer and are engaging in significant cost-shifting to employees to keep premiums down, according to a new survey of market conditions by The Council of Insurance Agents + Brokers. The first Employee Benefits Market Survey showed that small and medium accounts, those representing up to 500 employees, are feeling the brunt of the cost increases.

According to the brokers and agents who placed the coverage, all members of The Council of Insurance Agents + Brokers, 72 percent of the small accounts (representing 50 or fewer employees) and 77 percent of the medium accounts (with 51 to 500 employees) experienced premium hikes of between 10 percent and 30 percent for their group medical renewals. Six out of 10 large accounts, with 501 or more employees, saw their rates increase 10 percent to 30 percent. An additional 23 percent of the small accounts and 20 percent of the medium accounts experienced premium increases ranging from 30 percent to 50 percent, the survey said. For large accounts, that figure was substantially lower, at only 7 percent. As has been the case with property/casualty rates for at least six months, no benefits accounts experienced a drop in premiums during the course of the survey - or even held steady. In a series of open-ended questions, the agents and brokers said that on the whole, the biggest factors in the higher group medical coverage costs were skyrocketing prices of prescription drugs and rising hospital costs. 
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LACK OF INSURANCE HURTING AMERICANS' HEALTH: REPORT

Tue May 21, 5:48 PM ET By Todd Zwillich WASHINGTON (Reuters Health) - The widespread lack of medical insurance in the US is directly contributing to poorer health and higher rates of early death among adults, according to a report released Tuesday by the Institute of Medicine. The report pulls together some 130 studies on the effects of insurance coverage on the prevention and treatment of common diseases and on overall health. It concludes that the 30 million US adults who currently lack coverage have poorer access to routine care that can help prevent disease and may even get worse care in emergency situations such as car accidents and heart attacks.

As a result, more than 18,300 Americans between 25 and 64 years of age die each year due to a lack of health insurance, according to the IOM, a private institute that advises the National Academy of Sciences on health policy. Experts, including many in healthcare lobbying groups, have long warned that lacking insurance coverage can lead to poorer health outcomes. Still, the report's authors said they were shocked by the size of the danger posed by going without insurance. Studies included in the analysis found that uninsured women with breast cancer have a 30% to 50% higher risk of dying from the disease than women with insurance. A 1992 study showed that uninsured patients with cardiovascular disease--the leading cause of death in the US--were twice as likely to have severe or uncontrolled disease than demographically similar patients with coverage. "This really does provide the evidence to convince people fully and completely," said Dr. Reed V. Tuckson, a member of the IOM committee who is also a senior vice president at United Health Group in Minnetonka, Minnesota.

The number of uninsured Americans has continued to grow along with a steep rise in healthcare costs since the mid-1990s. About 40 million Americans currently lack private coverage, mostly because their employer does not offer it or because they cannot afford the premiums or other out-of-pocket costs needed to maintain coverage. Apart from paying for some medical expenses, health coverage has the advantage of coordination so that patients can receive preventive care before they get sick as well as ongoing care once they become ill.

IOM's report blames this loss of access to health management, good preventive care and early diagnosis as the main cause of poorer health outcomes among uninsured people. For example, a 1999 study included in the report found that women without health insurance were one-quarter as likely as insured women to have had a mammogram screening for breast cancer in the last 3 years. Uninsured individuals were also only one-third as likely to have had their cholesterol checked within the last 5 years.

Experts said that providing widespread health coverage to American adults before they get sick could also help narrow broad health disparities between whites and ethnic minorities. Whites are twice as likely as Hispanics and three times as likely as African Americans to have health insurance. "If adults who are now uninsured were covered on a continuous basis, their health could be expected to be better and their risk of dying prematurely would be reduced," said Dr. Mary Sue Coleman, the panel's co-chair and president of the University of Iowa and Iowa Health System in Iowa City.

However, the report also cites studies showing that uninsured patients get poorer care in emergency departments and trauma centers. A 1994 study showed that trauma patients without insurance were 40% less likely to receive surgery than were insured patients with the same injuries. "It's often one of the first pieces of information that's obtained from them--what their insurance status is," said Dr. John Ayanian, a panel member who is a health policy analyst and practicing internist at Harvard University Medical School in Boston, Massachusetts.

The report did not evaluate how much cost is added to the US healthcare system because of poorer health outcomes that go along with lacking insurance. But those costs, which will be the subject of a future IOM report, are very likely to be high, said committee member Dr. Edward H. Wagner. Coleman said that the report should serve as "hard data" as policymakers set about the task of finding ways to reduce the number of Americans who lack coverage. Some proposals, including one by President George W. Bush, call for providing tax credits that individuals could use to purchase coverage on the private market. But many Democrats balk at the idea of tax credits because they are unlikely to cover the cost of most insurance policies. They tend to favor credits that go hand-in-hand with expansions of public health programs like Medicaid. 
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S&P SAYS US HEALTH CARE SECTOR ON THE MEND

NEW YORK, May 16 - The U.S. corporate health care sector-bolstered by sustained demand, favorable pricing, and improving capital structures-looks promising into the next year, Standard & Poor's said in an article, "U.S. Health Care Feeling Better," published May 16 on RatingsDirect, Standard & Poor's Web-based credit analysis system.

With 28 ratings upgrades and 18 downgrades since early 2001, health care has fared better than U.S. industrials overall. Consolidation of diagnostic and medical product operations "will have an important bearing on credit quality," said Michael Kaplan, managing director and credit analyst in Standard & Poor's Health Care sector. For example, Beckman Instruments Inc.'s acquisition of Coulter Corp. several years ago-to become Beckman Coulter Inc.-now has generated cash flow, which contributed to its rating upgrade. On the other hand, the additional debt related to DENTSPLY International Inc.'s recent purchase of another dental products supplier led to its downgrade last year.

Four of the five nursing home chains publicly rated by Standard & Poor's fall into speculative-grade categories. After seeing a decline in Medicare revenues and a string of bankruptcies in the late 1990s, the chains have benefited from subsequent reimbursement adjustments. While Mr. Kaplan is optimistic that the chains will not see a drastic reduction in reimbursement, potential fee changes remain a concern.

Third-party payments also play a role in the corporate hospital sector, in which five of 12 companies are rated as investment grade, or 'BBB-', or better. Significant rate increases in managed care contracts have contributed to strong revenue and volume growth in the sector this year but the increases are not sustainable, according to David Peknay, credit analyst in Standard & Poor's Health Care sector.

The largest U.S. drug companies rank in the 'AAA' to 'A' ranges, and biotech firms in the 'A' to 'BBB' categories. However, patent expirations and regulatory and government developments are causing rough spots. Also, the battle for new customers has intensified, noted Arthur Wong, also a credit analyst in Standard & Poor's Health Care sector. "Marketing has increased significantly as a major expense for drug companies," he added. Return To
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NEW YORK STATE MANDATES INFERTILITY COVERAGE

Both houses of the New York legislature passed bills requiring benefit plans to cover most types of infertility treatments. 

The measures mandate private health insurance plans offering prescription drug coverage to cover certain fertility drugs for women ages 21 to 44, but not in-vitro fertilization or vasectomy reversal procedures. Medicaid beneficiaries and people with individual policies would be ineligible for coverage. Gov. George Pataki plans to sign the measures, set to take effect Sept. 1.

That would end three years of contentious debate among state lawmakers over infertility coverage. “This is a tremendous gift to New Yorkers,” says American Infertility Association Executive Director Pamela Madsen.

Some women’s advocates, however, question the passage of bills guaranteeing infertility coverage, when the state does not yet require insurers to cover contraceptives.  Return To
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New Survey Shows Dental Benefits Still Valued Part of Prospective Employers' Total Compensation Offer

Americans Don't Blame Dental Industry for Current Healthcare Challenges. SAN FRANCISCO--(BW HealthWire)--May 15, 2002--A new nationwide poll shows that despite growing concerns with the nation's healthcare system, demand for employer-sponsored dental benefits remains high, and most Americans don't generally associate challenges facing today's national healthcare system with dental benefits

The survey, conducted by Taylor Nelson/Sofres Intersearch as part of a broader market research study for Delta Dental Plans in California, Pennsylvania and affiliated operations in 16 states plus the District of Columbia, addresses several aspects of American attitudes regarding dental benefits. For instance, it suggests that most Americans expect dental to be offered when job seeking, and they do not view the rising cost of medical insurance to employers as a plausible reason for cutbacks in their employer-sponsored dental programs.

"Healthcare inflation is challenging benefit consultants and their clients to rethink their overall approach to benefits, and in some cases to shift costs to their employees or even eliminate ancillary benefits like dental or vision," said Gary D. Radine, president and CEO of San Francisco-based Delta Dental Plan of California. "The survey, however, indicates that dental benefits are not viewed as dispensable by job seekers, and that reducing or eliminating dental is not likely to be appreciated or understood by the workforce."

Radine said the survey also shows widespread agreement with the idea that dental is different with respect to some of the larger challenges faced by the nation's healthcare system. Against a random sample with a margin of error of plus or minus 3 percent, the survey uncovered the following prevailing attitudes regarding dental benefits across the nation:

  • 48.3 percent of respondents from a base of 1,025 felt it is "very important," and 30.3 percent felt it is "somewhat important," to have dental insurance provided by a prospective employer.
  • 41.2 percent of respondents consider dental insurance to be only a minor part of the national healthcare problem, while 22.8 percent don't consider dental insurance to be a part of the problem at all. The "problem" was loosely defined in the survey as double-digit annual increases in insurance premiums, leading to reduced access to health insurance for a growing number of people.

On a separate question, 635 employed adults responded to how they would react if their employer reduced their dental coverage or increased the employees' contribution. Of respondents with employer-provided dental coverage: 40.6 percent felt this would be a significant loss.

Only 18.9 percent felt that their employer would have to be forced into such a move in order to reduce expenses, while 37.6 percent either "strongly agreed" or "somewhat agreed" that such a move was probably done: "...to improve the bottom line." Return To Index

NATION SURVEY FINDS U.S. WORST ON HEALTH CARE ACCESS

Tue May 14, 1:31 PM ET By Karen Pallarito NEW YORK (Reuters Health) - Americans are much more likely than residents of four other industrialized nations to report problems securing access to healthcare due to cost, according to survey results released Tuesday. At least one in five US adults in the study reported having a problem paying medical bills or difficulty affording prescriptions, medical care or doctor-recommended tests and follow-up treatment, researchers from the Harvard School of Public Health and the Commonwealth Fund report. In large part because of the nation's high rate of uninsurance, low-income Americans were the least satisfied of any group in the study and the most at risk of foregoing needed medical care.

The survey, which is the fourth in a series gauging perceptions of international healthcare systems, was conducted between April and May of last year. The United States is the only nation in the survey that does not provide universal health insurance coverage. While the results suggest there's no "Utopian answer" to healthcare cost and access problems, "covering the uninsured would make a dramatic difference in the pattern of care in the United States," co-author Robert Blendon, a professor of health policy and management at Harvard, told Reuters Health.

"For countries with universal systems, the results suggest the need to focus on the problems of people who are less well-educated and have lower incomes," he said. The US, which has the highest percentage (21%) of people reporting having a problem paying medical bills, ranks below other nations on most measures of patient perceptions and experiences. While lower-income citizens in all five countries reported difficulty getting access to dental care because of cost, for example, the gap was greatest in the US. Just over half (51%) of lower-income Americans reported foregoing needed dental care in the previous year, versus 24% of the nation's higher wage-earners.

Blendon, who has been tracking people's perceptions of the five nations' healthcare systems for more than a decade now, says no country has been able to satisfy the expectations of all its citizens, particularly of middle-income people. Every country in the poll has its unique difficulties. Adults in the UK reported the longest waits for elective surgery, for example, while New Zealanders had more income-related inequities in the care they received. In Canada, 16%, on average, found it very or extremely difficult to see a specialist. And 19% of Australians said they did not fill a prescription in the past year due to cost. Yet the US remains "an outlier" among the five nations, with many more problems than the other countries, especially for low- and moderate-income people, Blendon said. That's partly due to a lack of universal insurance coverage, but also reflects, in some cases, an inadequate level of benefits to protect Americans from cost of illness, he added. Return To Index

SMALL BUSINESS HEALTH INSURANCE PLAN COULD BACKFIRE

Wed May 8, 5:53 PM ET By Julie Rovner WASHINGTON (Reuters Health) - So-called Association Health Plans (AHPs), promoted by President Bush and Congressional Republicans as a way to expand low-cost insurance coverage for small businesses, could end up raising costs instead, said the Blue Cross and Blue Shield Association (BCBSA) Wednesday. At the same time, said the group in a new report, AHPs could invite the same sorts of fraud and abuse that plagued the small group health insurance market in the 1970s and 1980s. AHPs, as they would be allowed under the version of the "patients' bill of rights" that passed the US House last summer, could be organized by groups like the National Federation of Independent Business or other umbrella associations. Plans could contract with health insurers and offer small businesses a choice of plans that would be exempt from most state regulation. Backers of the proposal say that by pooling purchasing power and bypassing state coverage mandates, premiums could be kept down.

But BCBSA Vice President for Policy Alissa Fox told reporters that by segmenting the market, premiums could actually go up. "It's really a recipe for breakdown of the small group market," she said. And Eleanor Hill of the law firm King & Spalding said in a report for the association that the new plans would reopen the door to the types of fraudulent plans that bilked consumers for millions of dollars in the 1980s until Congress stepped in to change the law.

Current proposals for AHPs, said Hill, who headed up a Senate investigation into fraudulent health plans in 1990, "rather than expand access to dependable insurance coverage...would instead generate greater opportunities for fraud and abuse to flourish at the expense of the public. The AHP provisions would remove the broad protection provided by experienced state regulators and replace it with a limited, and clearly inadequate, federal regulatory framework."

Hill said that in some cases, efforts by sponsors of AHPs to respond to complaints raised about earlier versions of the bill, have made it worse instead of better. While earlier versions allowed the US Department of Labor to delegate regulatory authority of AHPs to state insurance departments, that is no longer allowed. And under newer versions of the bill, she said, federal officials can only "consult" with one state, even if a plan operates in multiple states. Hill also said that fraudulent health plans are again proliferating. "There are a lot of unlicensed health insurers out there that states are catching," she said, but added that states would be unable to police AHPs if they are allowed. Return To Index

FEDERAL GOVERNMENT LEADS EDUCATION EFFORT ON LONG TERM CARE INSURANCE THROUGH ITS LONG TERM CARE INSURANCE PROGRAM

Long Term Care Partners Formed By MetLife and John Hancock to Provide Program to 20 Million Federal Employees and Annuitants/Retirees.

PORTSMOUTH, N.H., May 8 /PRNewswire-FirstCall/ -- The federal government is leading an educational effort to inform the workforce about long term care insurance. With the recent awarding of a contract to offer all federal employees long term care insurance through Long Term Care Partners, LLC, a joint venture company between John Hancock Life Insurance Company (John Hancock) and MetLife, more than 20 million individuals will be able to enroll through the Federal Long Term Care Insurance Program (FLTCIP).

"The decision by the federal government's Office of Personnel Management (OPM) to award this contract is an affirmation of the need for long term care insurance across the board," said Joyce Ruddock, vice president, MetLife, and chairman of the management committee, Long Term Care Partners.

"The U.S. government is one of the nation's largest employers. Clearly, the government is acknowledging that people need to be prepared for their long term care needs and that Americans need to confront this issue," said Ruddock. "Studies have shown that while most Americans worry about their long term care needs, two-thirds of the general public admit they will not have enough funds available should they become disabled," said Ruddock.

Long Term Care Partners LLC, in conjunction with OPM, is launching a major educational campaign to explain long term care insurance to government employees. The first round of educational material, a free subscription to a bulletin called "Get Smart About Your Future," has been mailed to 2.4 million federal civilian annuitants, 2.6 million postal and military retirees and millions more active federal employees.

The program will be open to all federal employees and annuitants (including the U.S. Postal Service and others), deferred annuitants, members and retirees of the uniformed services and qualified family members (including spouses of employees and annuitants, adult children age 18 and older of employees and annuitants, parents, parents-in-law, and step-parents of employees).

"Long Term Care Insurance is increasingly necessary due to today's national average cost of $20,000 per year for home care and $50,000 per year for nursing home care," said Kay Coles James, Director of OPM, which administers employee benefit programs. "By 2030, it is estimated that the national average cost of home care will be $68,000 per year and $190,600 a year for nursing home care. It is important to note that 40% of persons receiving long term care in this country are under age 65." Long term care is not covered by conventional health plans or disability insurance.

"We chose Long Term Care Partners on the basis of the product it is offering and the fact that both MetLife and John Hancock have the resources and experience to efficiently provide this insurance protection," said James.

"Unlike many other long term care insurance programs, this one has comprehensive insurance that makes payments toward several types of long term care (including but not limited to nursing home care, assisted living facility care, formal and informal care in your home, hospice care, and respite care) and a variety of choices for: maximum benefit, length of policy, waiting period and inflation protection," said James. "The plan will include care coordination and tax-deductibility of premiums in many states where such legislation has been passed. It will also evolve with the market to adjust for technological advancements in the long term care industry."

Long Term Care Partners, LLC, recently launched its early-enrollment period for the Federal Program, which runs through May 15. The early- enrollment period is most appropriate for individuals who are well informed about long-term care insurance and do not need the assistance that the core education campaign will provide before and during the open season that runs from July 1, 2002 through December 31, 2002.

The program is the result of a legislative proposal submitted to Congress in January 1999, which the House and Senate passed in July 2000. The Long Term Care Security Act (PL 106-265) was signed into law on September 19, 2000. Long Term Care Partners, LLC was awarded the contract following a lengthy review and bidding process.

The Federal Long Term Care Insurance Program is administered by Long Term Care Partners, LLC, and offered by John Hancock Life Insurance Company and Metropolitan Life Insurance Company. Long Term Care Partners, LLC is based in Portsmouth, New Hampshire and is a limited liability company governed by a policy committee. It will employ 150 individuals. MetLife and John Hancock are the country's largest carriers of group long term care insurance. Return To Index

 
HARRISBURG, Pa., May 2 /PRNewswire/ -- Auditor General Robert P. Casey, Jr. today released a performance audit of Pennsylvania's oversight of its Children's Health Insurance Program (CHIP), which found that the CHIP program forfeited $103 million in state and federal funds and expects to forfeit at least $38 million additional federal funds. At the same time, the audit found that there were significant numbers of children -- as high as 50,000 -- who were eligible for CHIP but not enrolled; the state had no way of knowing whether children enrolled in the program actually received health care; and that additional action is necessary to ensure that eligible families obtain and maintain enrollment. The audit of the Pennsylvania Insurance Department covered its oversight of the CHIP program for a four-year period from 1997 - 2001.
 
"The failure to spend more than half of the funds earmarked for CHIP -- resulting in permanent loss of some of these funds -- represents a serious problem," Casey said. "The Insurance Department should have used these funds to enroll the tens of thousands of uninsured children who were eligible for CHIP. They also needed to do more to ensure that children who were enrolled actually received services." Pennsylvania's CHIP program was created in 1992 as a landmark initiative to provide health care coverage to children of low-income working families. Initial enrollment quickly expanded, outgrowing available state funding. When federal funding became available in 1998, Pennsylvania was cited in the enabling legislation as an example of how state programs should be modeled. The full text of the audit report is available on the Department's website at www.auditorgen.state.pa.us. For more information about the CHIP program, families should call 1-800-986-KIDS. Return To Index
 
 
HARRISBURG, Pa., May 2 /PRNewswire/ -- On behalf of Gov. Mark Schweiker, Insurance Commissioner Diane Koken today announced that insurance agents and brokers now can save valuable time by renewing their insurance licenses online. "Our goal is to make license renewals as simple and as friction-free as possible," Commissioner Koken said. "This service permits individuals who are compliant with continuing education requirements and who hold an active insurance license to process their current renewal online instead of mailing the renewal form and payment to the Insurance Department." In the past, license renewals could take more than 14 days for mail-in processing. Now, a license can be renewed the same day using a credit card. Individuals must have their license number, social security number or employer identification number for an agency, and valid credit card to access the system. Individuals subject to continuing education must be compliant with their required hours to use the online renewal system. Return To Index

 

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