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Headlines: June 8, 2011

by Tony Kikendall


McKinsey & Co. released a report that 30% of employers are expected to stop offering health insurance in 2014. Many employers are currently seeking a waiver from the requirement that they enrich their benefits this year. 1,372 of these waivers had been issued by the end of April. In 2014, this waiver will no longer be offered. This report shows a marked change in the number of employers expected to stop offering insurance. As such, the Obama administration called this survey an anomaly, as it was different than the previous ones. The health care law contains a disincentive to drop coverage, but some employers may find it econcomically advantageous to drop coverage and take the financial penalty of $2,000 per uncovered employee, after the first 30 employees.

Blue Shield of California, an insurance provider, announced that it will cap its earning and refund most of the excess to insurees. The nonprofit organization set the profit limit to 2 percent of revenue and said that it will return $180 million. Other insurers have not yet followed suit, but others may as the federal health care law goes into effect. Blue Shield had earlier been criticized for keeping large reserves that were above what they needed to operate and for having high rate increases.

Health insurance premiums are going down at some other insurance companies, including Aetna. Like Blue Sheild's move, this was also sparked by the health care overhaul. Under the new law, profits and administrative expenses cannot exceed 20 percent of revenue. The move to reduce premiums is not yet widespread, but more companies may do this in response to the health law.

Germany continued to be criticized for its role in the European E. coli crisis. 22 people have been killed, and over 2,000 people have caught the bacteria, although there is some disagreement over just how many people above 2,000 have been affected. An agreement for Germany to compensate the Spanish farmers they blamed for the E. coli outbreak has not yet been reached.

Tony Kikendall is a rising second year law student at Boston University. Please feel free to email him with any questions, comments, suggestions, or concerns.


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