David Ermer
Managing Partner
Ermer and Brownell, PLLC

Barbara Niehus, FSA
Consulting Actuary

HDM Warns Self-insured Plans
About Health Plan Cost Escalators

HDM, Inc. COO David McSweeney conducted a Q2 2009 campaign to warn self-insured employers about economic and legislative factors that HDM believes will cause health plan costs to rise, beginning now and continuing for the next four to five years.

McSweeney has two collaborators in the campaign: Barbara Niehus, FSA, a consulting actuary with more than 30 years of group life and health insurance experience and David Ermer, Managing Partner of Ermer and Brownell, PLLC, a Washington, D.C.-based law firm with extensive experience in legal matters related to health plans.

The trio’s message is not one about the sky falling. “It’s about being prepared for inevitable cost increases,” McSweeney said.

McSweeney, Niehus and Ermer have isolated 11 factors that will impact self-insured plans by increasing costs, shifting costs and adding new costs to the health plan equation.

The 11 factors break down like this:

Cost increases will be caused by…

• The Cobra subsidy provided by the American Recovery and Reinvestment Act of 2009
• The financial pressure being placed on healthcare providers
• Forward buying of medical services
• Expanded Federal and state dependent eligibility
• The vast number of code additions that will result
  from ICD 10.

Cost shifting will be caused by…

• The growing disparity between Medicare/Medicaid and commercial payments
• Medicaid Rx rebates
• The Children’s Health Insurance Program (CHIP) Reauthorization Act signed by President Obama.

New costs will hit health plans as a result of…

• The Mental Health Parity and Addiction Equity Act of 2008
• The flap caused by the Ingenix database
• Changes to Title 1 of the Genetic Information Nondisclosure Act (GINA).

McSweeney, Niehus and Ermer first sounded the alarm in an extensive article titled, "Storm Coming for Self-funded, Multiemployer Health Plans" for the August 2009 issue of Benefits & Compensation Digest published by the International Foundation of Employee Benefit Plans. The focus of the story was Taft-Hartley plans. However, the advice conveyed applies to all self-funded plans.

The trio also did a series of Webinars on the subject in June, and McSweeney gave a heads up to the Philadelphia chapter of the Society of Actuaries in June, as well. Click here to download the article and or watch a streaming recording of the Webinar.

You can also view the article, which is listed as a white paper at www.cfo.com.