Sunday, September 18, 2011

Weekend Update

There's a good chance that OPM will announce the 2012 FEHBP premiums and the change in the government contribution this coming week.

Of course, Congress is in session this week. The House will consider a continuing resolution (H. J. Res. 79) to fund federal government operations from October 1, 2011, the beginning of the new federal fiscal year, until November 18, 2011.  Section 124 of the continuing resolution would extend from September 30, 2011, to November 18, 2011, the payment date for the $5.5 billion that the Postal Service owes to pre-fund its retiree health care obligations. The OPM Director informed Congress that the Administration's proposal to assist the Postal Service would be included in the President's deficit reduction proposal to the Super Committee which is expected this week.

The prescription benefit manager's trade association, the Pharmaceutical Care Management Association (PCMA), recently sent the Super Committee a set of recommendations to reduce prescription drug spending by $100 billion over the next decade. The recommendations include expediting the approval of bio-generic drugs and eliminating the tax deduction for direct to consumer marketing.

GAO issued a report (No. 11-711) on early experiences with the minimum loss ratio which found that

From 2006 through 2009, traditional MLRs on average generally exceeded  PPACA MLR standards. This is even without the additional components in the new PPACA MLR that will generally increase MLRs. However, traditional MLRs  also varied among insurers. Traditional MLRs within the individual market varied  more than those within the small and large group markets, and a larger proportion of individual market insurers generally had lower MLRs. Additionally, traditional MLRs varied more among smaller insurers than among larger insurers in all three markets. Some components of the PPACA MLR requirements may mitigate the implications of some of these variations. 
FEHB plans fall into the large group market.

Last Thursday, Standard and Poors released its health care economic indices for the 12 month period ending July 2011
Data released today by S&P Indices for the S&P Healthcare Economic Composite Index indicate that the average per capita cost of healthcare services covered by commercial insurance and Medicare programs increased by 5.71% over the 12-months ending July 2011. This index has seen a modest acceleration in annual growth rates for three consecutive months – with readings of +5.34%, +5.55% and +5.59% in April, May and June, respectively.
As measured by the S&P Healthcare Economic Commercial Index, healthcare costs covered by commercial insurance increased by 7.73% over the year ending July 2011. Medicare claim costs rose at an annual rate of 2.35%, as measured by the S&P Healthcare Economic Medicare Index. With July’s data, the Medicare index reached yet another low in its six-and-one-half year history. The index is 5.67 percentage points below its high annual growth rate of +8.02%, recorded in November 2009.

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