Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

Companies fight rising cost of health insurance

- by Alan Duvall 

Published in Dayton Daily News   October 29, 2006 

“Waste not the smallest thing created, for grains of sand make mountains,” E. Knight. 

Millions of Americans with health insurance pay premiums which have inexplicably increased by double-digit increments for what seems like eternity. 

Insurance exec explanations ring hollow:  It’s the attorneys and their lawsuits.  Blame the hospitals.  Which do you prefer – good health or wealth.  You can’t spend it when you’re dead.” (OK, I made up the last one.).  

Perhaps the real culprit is closer to home than insurance giants care to admit.  William McGuire, the CEO of UnitedHealth Group, Inc. recently resigned in the wake of accusations he unfairly benefited from a series of back-dated stock option grants worth a purported $250 million.   

Poor McGuire.  He must really have needed the extra dough since he averaged only $10 million in non-option compensation each of the last three years.  He departs United lugging a tattered knapsack containing options purportedly worth over $1 billion and a severance package paying him over $5 million per year. 

Meanwhile, employer and individual policy-holders face mounting pressure of escalating health insurance costs.  What to do? 

Employers are beginning to employ non-traditional means to battle the tide.  The foundation of the new strategy rests with implementation of an insurance policy which covers only catastrophic health costs generally exceeding $5,000 per event.  One innovative consultant is even alleging a series of employer-reimbursed individual policies for employees is collectively more cost beneficial than an employer group policy. 

Costs below the insurance threshold may be covered by a self-insured combination of highly  deductible health plans and health savings accounts, which in turn may contain new-age incentives.  For example, economical generic, over-the-counter or mail order drugs may be 100% reimbursed, whereas more expensive brand name drugs receive only partial payment.  The objective is to encourage consumers to make budget-based decisions. 

What's the insurance companies' reaction to businesses selling these innovative cost cutting measures?  A local health benefits agency claims in an anti-trust lawsuit Anthem Blue Cross and Blue Shield conspired to “blacklist” the agency and “threatened” any Anthem insurance brokers who worked with the company. 

A Federal judge overturned Anthem’s motion to dismiss thus allowing the case to proceed to trial, pending appeal.

 “Even castles made of sand fall into the sea eventually.”  Jimi Hendrix. 

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.