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Survey: Health plan premiums outpacing pay raises, inflation

BY Michael Johnsen

MENLO PARK, Calif. — Annual premiums for employer-sponsored family health coverage reached $15,745 this year, up 4% from last year, with workers on average paying $4,316 toward the cost of their coverage, according to the Kaiser Family Foundation/Health Research and Educational Trust 2012 Employer Health Benefits Survey released Tuesday. 

This year’s premium increase is moderate by historical standards, but outpaced the growth in workers’ wages (1.7%) and general inflation (2.3%). Since 2002, premiums have increased 97%, three times as fast as wages (33%) and inflation (28%).

“In terms of employee insurance costs, this year’s 4% increase qualifies as a good year, but it still takes a growing bite out of middle-class workers’ wages, which have been flat or falling in real terms,” stated Drew Altman, Kaiser president and CEO.

The 14th annual Kaiser/HRET survey of more than 2,000 small and large employers provides a detailed picture of trends in employer-sponsored health insurance costs and coverage. The survey reveals significant differences in the benefits and worker contributions toward family premiums between firms with many lower-wage workers (at least 35% of workers earn $24,000 or less a year) and firms with many higher-wage workers (at least 35% of their workers earn $55,000 or more a year). 

Workers at lower-wage firms on average pay $1,000 more each year out of their paychecks for family coverage than workers at higher-wage firms ($4,977 and $3,968, respectively). This occurs even though the firms with many lower-wage workers on average pay less in total premiums for family coverage than firms with many higher-wage workers ($14,694 and $16,427, respectively).

In addition, workers at lower-wage firms are also more likely to face high deductibles than those at higher-wage firms. Specifically, 44% of covered workers at firms with many low-wage workers face an annual deductible of $1,000 or more, compared with 29% of those at firms with many high-wage workers. Across all employers, a third of covered workers (34%) face a deductible of that size, including 14% with deductibles of at least $2,000 annually.

“This year’s survey suggest that working families at the low end of the wage scale face significant out of pocket costs for coverage,” stated study lead author Gary Claxton, a Kaiser VP and director of the Foundation’s Health Care Marketplace Project. “Firms with many lower-wage workers ask employees to pay more out of pocket than firms with many higher-wage workers even though the coverage itself tends to be less comprehensive.”

The survey estimated that 2.9 million young adults are currently covered by employer plans this year as a result of a provision in the 2010 Affordable Care Act that allows young adults up to the age of 26 years without employer coverage of their own to be covered as dependents on their parents’ plan. That’s up from the 2.3 million in the 2011 survey. Young adults historically have been more likely to be uninsured than any other age group.

The survey also found that 48% of covered workers are in “grandfathered” plans as defined under health reform, down from 56% last year. Grandfathered plans are exempted from some health-reform requirements, including covering preventive benefits with no cost sharing and having an external appeals process. To retain this status, employers must not make significant changes to their plans to reduce benefits or increase employee costs.

In addition to the survey conducted in the spring, employers were asked in August whether they had information about the change in premiums (or total cost for self-funded plans) for their current health plan with the largest enrollment. The average increase reported by employers who had received information for their current plan is 7%.

These early reports may not match what employers and workers ultimately end up paying next year, as firms can raise deductibles or otherwise change the health benefits and plans they offer to lower premiums. This year, for example, more than half (54%) of employers who offer health benefits reported that they had shopped around for new coverage. Of that group, significant shares switched carriers (18%) or changed the type of plans they offer (27%).


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FDA: No matter that firms market concussion treatments as supplements; they’re unapproved drugs

BY Michael Johnsen

SILVER SPRING, Md. — The Food and Drug Administration on Thursday issued warning letters to PruTect Rx, of Highlands Ranch, Colo., and Trinity Sports Group, of Plano, Texas, for promoting products labeled as dietary supplements with claims to treat concussions and prevent or treat post-concussion syndrome and other neurological disorders.

The products cited in the warning letters include Trinity Sports Group’s Neuro Impact Concussion Response Formula and PruTect Rx’s NeuroPruTect and Omega3PruTect. These products are in capsule and powder forms. They are marketed online in the United States and internationally.

Under the Federal Food, Drug, and Cosmetic Act, a product is a drug and not a supplement if it is intended for use in the diagnosis, cure, mitigation, treatment or prevention of disease. New drugs may not be legally marketed in the United States without prior FDA approval. Although Neuro Impact, NeuroPruTect and Omega3PruTect are marketed as dietary supplements, they are promoted as drugs through claims made on the firms’ websites.

“The FDA has taken these actions because companies may not sell new drugs unless the drugs have been tested by the sponsor and approved by FDA, and they may not make false or unsubstantiated claims about drugs they sell,” stated Dara Corrigan, the FDA’s associate commissioner for regulatory affairs. “Products with unapproved claims are dangerous because they may cause consumers to delay or avoid legitimate treatments.”


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Louisiana pharmacist to Congress: Independents need to stay in the DME business

BY Michael Johnsen

ALEXANDRIA, Va. — Louisiana pharmacist Randy Mire testified before Congress Tuesday that efforts to combat the diabetes epidemic in his home state and elsewhere would be significantly undermined if independent community pharmacies like his are forced to stop offering diabetes testing supplies as a result of Medicare’s competitive bidding program for durable medical equipment, according to a National Community Pharmacists Association release.

Mire appeared on behalf of NCPA before the U.S. House Small Business Subcommittee on Healthcare and Technology.

“My pharmacy is one of the very few pharmacies still in the area that provides these essential DME supplies to patients,” testified Mire, owner of Gem Drugs, located in Reserve and Gramercy, La. “To me, these patients are more than just a prescription. I provide DME supplies in order to make certain that the beneficiaries have access to the supplies that they need. If I were to decide not to offer these DME supplies because the burden of offering such supplies has become too high and the cost too much, then these beneficiaries would have nowhere else to turn to receive the face-to-face consultations and quality supplies that I provide to them and that they deserve.”

The Bayou State has among the highest diabetes rates in the nation, he noted, and his patients have complained that mail-order deliveries lack adequate patient consultations and are unreliable — a fact driven home by the recent impact of Hurricane Isaac on his community.  

Mire urged lawmakers to support H.R. 1936, The Medicare Access to Diabetes Supplies Act. The bipartisan legislation would allow small pharmacies — defined as 10 locations or fewer — to continue to furnish patients with diabetes testing supplies and personalized counseling on their proper use, as competitive bidding is implemented. 

NCPA noted that a recently conducted survey of more than 400 community pharmacists found:

  • About 92% of independent community pharmacies would be forced to leave the Medicare diabetes test supply program if presented with a sharp reduction in payments;

  • More than 50% of community pharmacies said that the average Medicare diabetic patient comes to their pharmacy at least three times per month for diabetic supplies and/or counseling;

  • 83% of community pharmacists said that the impact on patients if they had to obtain diabetes supplies from mail order would be significant; and

  • 45% of community pharmacies deliver diabetes testing supplies to assisted living facilities. CMS’ current competitive bidding proposal would prohibit these pharmacies from doing so.

In addition to Mire’s testimony (available in its entirety here), NCPA submitted written comments to the subcommittee (available here).


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