Company Drug Prescription Plans Vary

The Kaiser Family Foundation has released a new retiree health benefits survey showing that almost 80 percent of employers that currently offer retiree health benefits will take government subsidies to maintain prescription coverage in 2006. The Pittsburgh Post-Gazette reports that the basic Medicare coverage of more than 12 million retirees is supplemented by company health plans. The annual survey was released last week in Washington.

The results of the survey emphasize the need for Medicare-eligible retirees to study their choices under the new Medicare Part D prescription drug benefit, according to the Pittsburgh Post-Gazette. Seniors may enroll in the new Medicare program between January 1, 2006 and May 15, 2006.

Hewitt Associates conducted the national survey with the Kaiser Family Foundation. More than 300 private sector companies, with more than 1,000 employees, participated in the study that represents 32 percent of Fortune 100 companies and 33 percent of Fortune 500 companies, according to the Pittsburgh Post-Gazette.

Frank McArdle of Hewitt Associates said in the Pittsburgh Post-Gazette, “So, not only is this a decision of consequence for retirees. It could also be a permanent and irrevocable decision,” as the survey shows 44 percent of companies participating in the survey said they would not allow retirees back into their company health insurance plans after they enroll in a Medicare prescription drug plan.

The bright spot is that employers participating in the survey say government subsidies will save them $626 per individual retiree, on average, McArdle told the Pittsburgh Post-Gazette. The not-so-bright spot is that retiree health benefit costs continue to rise.

“Total savings from subsidies represent 7 percent of the estimated total for retiree health costs. This illustrates why cost pressures, in my opinion, are going to remain intense even in the aftermath of the Medicare drug benefit. The savings are going to be significant and important, but the costs are also going to be impressive as well,” said McArdle in the Pittsburgh Post-Gazette.

In November, companies were required to advise retirees if their existing coverage was good as, or better than, the new Medicare Part D prescription drug program. If companies demonstrated that their programs were “actuarially equivalent” to the government plan, the company plans could receive tax-free subsidies, if the companies maintain their health insurance plans.

USA Today recently compared six of 10 national plans. Their results found that:

• Cigna’s premiums are higher than the others but the benefits are greater. Its co-payment system has only three tiers while other plans have four or more tiers. Their formulary (or list of covered drugs) includes more drugs in number.

• Humana has three plans and two had the lowest monthly premiums. The higher-priced plan covers both generic and brand-name drugs when beneficiaries hit the coverage gap, where most policies require members to pay the full cost of drugs.

• Medco offers a single plan similar to the standard Medicare benefit. It also offers the highest co-payment for non-preferred brand name-drugs.

• PacifiCare offers three plans without annual deductibles. One plan allows for generic drugs in the coverage gap.

• UniCare offers three plans that feature an extensive formulary listing more than twice as many drugs as other carriers.

• United offers low premiums and their plans have fewer prior-authorization drug requirements than other reviewed insurers. One of its policies is marketed by AARP.

A new survey shows that nine of ten U.S. healthcare leaders are saying that a taxpayer funded healthcare system is not the best path to solving U.S. healthcare problems. 95 percent of the survey participants anticipated healthcare spending to increase and 51 percent of those, predict accelerated spending at higher than past rates.

The survey, released by PricewaterhouseCoopers, also expects global healthcare spending to increase three times over the next 15 years, to $10 trillion. This figure would expend 21 percent of the U.S. gross domestic product. Other developed nations spend $2,192 per person on healthcare while the U.S spends $5,635 per person according to the Organization of Economic Cooperation and Development.

Jim Henry, the global leader for healthcare for PricewaterhouseCoopers, said in a prepared statement, “In our extensive discussions with healthcare executives and policy makers, the message is clear: The healthcare system is in crisis. But while the government plays an extremely important role, it cannot solve the problem alone, and we should not keep waiting for it to do so. Government is looking to the private sector to take the lead in finding innovative, market-driven solutions. Healthcare organizations must find ways to work together, across the health spectrum and in concert with the government in ways that have not yet taken place.”

The U.S. House of Representatives approved a bill that slows down Medicare spending for the next five years. Reuters reports that the bill was approved Monday and is pending in the Senate. The net savings provided by the bill is $6.4 billion. Doctors will not receive any Medicare fee increases in 2006 instead of having their pay cut 4.4 percent next year. The bill also stops increases to home healthcare payments and cuts payment rates for imaging such as MRIs that over five years would save $2 billion and $2.8 billion respectively.

Dr. Edward Hill, American Medical Association president, said in Reuters, “By freezing payments at 2005 rates, the House has stopped a planned 4.4 percent payment reduction that would force physicians to limit the number of new Medicare patients they take into their practice.”

It is important to review all healthcare information carefully. Recently, information shown on the Centers for Medicare and Medicaid (CMS) web site was found to be incorrect. The "logic error" in the calculation was corrected the same evening it was reported, according to spokesman Gary Karr speaking with AccountingWEB.com. No more miscalculations have been reported. The information on the web site is used to compare prescription drug policies and co-pays.

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