Thursday, May 08, 2008

Midweek Miscellany

  • The AIS Health Business Daily featured an article suggesting that FEHB enrollees are migrating to lower premium plans. In fact, that trend has been a feature of the FEHB Program for over 25 years. In 1981, the Reagan Administration forced carriers to cut benefits which made lower premium plans more attractive. That action result in a mass migration of enrollees into lower premium plans. The pace has slowed but it's never stopped.
  • includes a column on the debate on Capitol Hill over whether or not to increase the dependent child age limit from 22 to 25. The column notes that

    While no official cost estimate has been calculated, Daniel Green, deputy associate director of the Office of Personnel Management's Center for Employee and Family Support Policy, said covering dependents already in FEHBP for an extra three years could cost approximately $200 million per year. He said the estimate was calculated by multiplying the number of dependents in the 22-to-25 age bracket (245,000) by the annual cost of health care for a young adult ($1,640).

    Green added that the government would take on $160 million of the additional cost, with the remainder paid by enrollees through increased premiums.

    But Kelley and John Gage, president of the American Federation of Government Employees, argued that increasing the dependent age by three years is likely to decrease premiums, since infusing a large number of young and generally healthy adults into a risk pool of typically older or retired federal employees should come at very little to no cost.

    "It's not a matter of simple math," Gage said. "I can't believe that this is a simple matter of multiplying the number of potentials times the cost for young adults, who should be very good at underwriting risk."

    Give me a break. I am not an actuary, but common sense tells you that savings only occurs when FEHB plans add young, healthy employees who pay the full premium. However, as OPM points out, adding members to an existing family enrollment only increases the cost of the enrollment.

  • Taking a page out of the federal government's Service Contract Act playbook, Aetna is planning to require its subcontractors to offer health benefits to their employees according to this Boston Globe report.

  • USA Today reported this week on identity thiefs who prey on medical records.

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