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December 10, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

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Survey Shows Consumerism Uptick in Health Benefits
Excerpt: "Years of rising health care premiums are making U.S. workers less willing to choose plans with higher up-front costs, according a survey by consulting firm Watson Wyatt. A survey of large company employees shows that workers are significantly less willing to pay higher premiums to keep out-of-pocket expenses like deductibles and copays lower this year compared with 2007." (AP via The New York Times; free registration required)

Employers Subsidize Public Health System by $88 Billion, According to Report
Excerpt: "Employers have long known they pay more for the same medical services than the federal government. This difference is often described as a subsidy that helps hospitals and doctors make up for the low -- and sometimes money-losing -- reimbursement rates paid by Medicare and Medicaid. Now, actuarial firm Milliman has quantified the impact of the subsidy on employers and employees, revealing that the difference tops $88 billion annually." (Workforce Management; free registration required)

The Relative (In)Efficiency of the U.S. Health Care System
Excerpt: "In 'Is American Health Care Uniquely Inefficient (NBER Working Paper 14257), researchers Alan Garber and Jonathan Skinner examine whether the apparently inferior performance of the U.S. health care system is real, and the reasons for the observed patterns of expenditures and outcomes. The authors distinguish between two types of efficiency. Productive efficiency refers to the amount of health that is produced from a given bundle of hospital beds, physicians, nurses, and other inputs. Allocative efficiency refers to whether an additional dollar spent on health care yields benefits that are as valuable to consumers as an additional dollar spent on schools, housing, or other goods. Some degree of allocative inefficiency is inevitable in any health care system, since by shielding consumers from the full cost of medical care, it leads them to consume care whose cost is less than their benefit. The authors ask whether productive and allocative efficiency are lower in the U.S. than in other developed countries." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext of Working Papers)

Health Care Costs and Reform in 2009
Excerpt: "In 2008, health costs rose by 6 percent -- about the same amount as the past few years -- but deductibles are also rising and more companies are offering consumer-driven health plans. The impact of today's economic turmoil on 2009 is unclear, as is the impact of potential health reform initiatives from Washington." (Human Resource Executive Online)

OPM Renegotiates Out-of-Network Health Benefits for Federal Employees
Excerpt: "The Office of Personnel Management announced on Friday that it is working with insurance carriers in the Federal Employee Health Benefits Program to reevaluate certain out-of-network benefits for nonemergency surgeries, a move that will extend enrollment until the end of January for federal employees who wish to change their plans. OPM on Friday asked the 269 insurance carriers in FEHBP to propose changes to their out-of-network surgery benefits by Dec. 8, the official close of federal benefits open season. The move was fueled by concerns over a change in coverage in the Blue Cross Blue Shield Standard Option -- the most popular federal employee plan -- that would have substantially increased the fees in 2009 paid by federal employees who have surgeries performed by out-of-network doctors." (

Health Insurers Protest $88.8 Billion 'Hidden Tax'
Excerpt: "Employers and private health insurers pay a 'hidden tax' of $88.8 billion each year because government programs fail to pay enough to doctors and hospitals, an industry-sponsored study found. Inadequate reimbursements by programs such as Medicare and Medicaid increase the annual cost of covering a family of four by $1,788, according to the report, issued today by the actuarial consulting firm Milliman Inc. At hospitals, the payment gap between private and public insurance has more than doubled in 10 years, the Seattle-based firm said." (Bloomberg L.P.)

2008 Consumer Awareness on Diabetes Survey Results (PDF)
44 pages. Excerpt: "To help establish baseline knowledge and to provide a statistically significant view into consumers' attitudes and behaviors regarding diabetes care and the use of healthcare quality information, the Dallas-Fort Worth Business Group on Health (DFWBGH) conducted a quantitative survey with the employees of DFWBGH member organizations in support of the Partnership for Peak Healthcare Performance (PPHP). The survey provided an understanding of an insured employee population that the PPHP could directly impact through worksite interventions at Corporate Member locations." (Dallas-Fort Worth Business Group on Health)

Good Wellness Programs Have the Right Support - Both Internal and External
Excerpt: "Research proves that wellness delivers results, from increased productivity and reduced absenteeism to early detection of costly chronic diseases. But for some employers, the impact on the bottom line seems less tangible and immediate than what other investments produce. That means HR professionals need to make the case to include wellness in the budget and advisers need to help them do that. Two keys to ensuring a sustainable wellness program are getting management buy-in and identifying off-setting expenses." (Employee Benefit Adviser; free registration required)

Global Corporate Challenge; Team-Based Approach to Wellness and Achievement of Personal Goals
Excerpt: "Since 2005, Australian company Global Corporate Challenge has been combating sedentary lifestyles and resolving health issues by creating a team-based fitness challenge, using two simple things: pedometers and employees. This year, Employee Benefit News signed on with two teams (The Benefat Burners and The Virtuosos) who pledged to tackle this challenge for themselves. The teams signed on to walk the talk for the duration of the challenge, which ran from May through September." (Employee Benefit News; free registration required)

Are Patent Expirations the Answer to Improving Patient Adherence?

Excerpt: "The idea makes a lot of sense. If there is something you want people to use more of and price is a barrier, you should lower the price. Furthermore, most people would agree that if you can increase the use of evidence-based, cost-effective healthcare, you should improve care and may even be able to reduce the overall cost of healthcare by eliminating expensive downstream services and procedures. Such is the idea behind value-based insurance design (VBID) -- reduce patient cost sharing on services proven to be a good value for the money spent as a way of increasing utilization and improving adherence. To date, however, there is limited evidence about the effects of VBID as it relates to medication adherence." (The American Journal of Managed Care)

California's Official Deficit Figure Is Way Too Low

Excerpt: "New accounting standards require governments to report costs of providing health care to retirees. A year ago, a blue-ribbon commission appointed by Schwarzenegger said state and local governments have a $118 billion unfunded health liability, with the state accounting for $48 billion of the staggering total. Schwarzenegger promised that the state would begin setting aside money in trust funds, similar to those maintained for public pensions, to whittle down the debt but he hasn't done it, even though a new report from the Center for State and Local Government Excellence says other states are taking action. Therefore, the official deficit estimate is at least $2 billion a year too low." (The Sacramento Bee)

Health Care: The 'R' Word Is Back - Regulation

Excerpt: "Our polls have long shown that the American people support regulatory action in health, even when they are given the arguments for and against it. This has been true even when the mood in Washington was pro-market and anti-regulatory. This is not surprising, since people are not really ideological about these things; they just want relief from health care costs and will support regulatory or market approaches if they think they will deliver it. What has changed is the appetite among policymakers for regulation and oversight in health." (Kaiser Family Foundation)

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Links to Items on Executive Comp, Benefits in General

[Official Guidance]
Text of IRS Notice 2008-115: Reporting and Wage Withholding Under Sec. 409A for 2008 and Later Years (PDF)

21 pages. Excerpt: "Generally, these requirements reflect an extension of the guidance provided in Notice 2006-100 and Notice 2007-89 applicable to calendar years 2005, 2006, and 2007. This interim guidance is effective for calendar year 2008 and will remain in effect for subsequent calendar years . . . ." (Internal Revenue Service)

What Is the Reality Behind the $73 an Hour Number?
Excerpt: "Seventy-three dollars an hour. That figure -- repeated on television and in newspapers as the average pay of a Big Three autoworker -- has become a big symbol in the fight over what should happen to Detroit. To critics, it is a neat encapsulation of everything that's wrong with bloated car companies and their entitled workers. To the Big Three's defenders, meanwhile, the number has become proof positive that autoworkers are being unfairly blamed for Detroit's decline." (The New York Times; free registration required)

Rethinking the Legal Oversight of Benefit Program Exclusions
Excerpt: "This article addresses both the legal and public policy implications of two-tier employment systems that deny some workers the right to participate in employee benefit programs including the use of independent contractor agreements and benefit plan eligibility criteria to restrict benefit program coverage. It concludes with recommendations for how the legal system should respond to this problem." (Rutgers Law Journal via Social Science Research Network)

Do Discount Rates Affect Behaviors Like Saving and Smoking?
Excerpt: "Researchers have long been interested in understanding how people make decisions about behaviors that have long-term consequences for their well-being, like saving or smoking. These decisions require individuals to consider how they value costs and benefits that occur in the future versus those in the present- for example, saving requires sacrificing consumption today in order to have higher consumption in the future. Economic theory predicts that the discount rate - the rate at which individuals discount future costs and benefits - will be a critical factor in these decisions. Different people are likely to have different discount rates, since some people are more patient (low discount rate) while others are more impatient (high discount rate). Do individuals' discount rates help to explain their decisions about behaviors like saving and smoking? This question is examined in a new study, 'Individual Laboratory-Measured Discount Rates Predict Field Behaviors' (NBER Working Paper 14270) . . . ." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext of Working Papers)

IRS Semiannual Regulatory Agenda Includes Further Guidance on 409A
Excerpt: "The IRS has released its semiannual regulatory agenda for Fall 2008, which includes pension and benefit regulations that are currently under development or review." (Wolters Kluwer)

Inaction on Big 3 Would Cost Taxpayers Billions

Excerpt: "Just walking away and letting the struggling Big Three automakers go under would drain government coffers by about as much as the $15 billion bridge loan that lawmakers are preparing, and perhaps much more, according to outside analysts. The costs would come from lower tax collections by the federal, state and local governments and the payment of extra unemployment, pension and other benefits to unemployed or retired auto workers." (AP via The New York Times; free registration required)

Newly Posted Events
(Post Yours!)

ERPA Test Review Web Seminar - Part 1: Compliance and Operational Issues
Nationwide on January 13, 2009
presented by SunGard Relius

ERPA Test Review Web Seminar - Part 2: Plan Document, Reporting, and Distribution Issues
Nationwide on January 27, 2009
presented by SunGard Relius

Health and Welfare Plan Management for Mid-Sized Employers Conference
in Florida on March 1, 2009
presented by University Conference Services

Mid-Sized Retirement & Pension Plan Management Conference
in California on March 10, 2009
presented by University Conference Services

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Defined Contribution Relationship Consultant
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