Some thought the creation of Medicare drug coverage would be an out for large employers seeking to cut drug coverage costs in their retirement plans.
But two of the largest employers in Orange County have opted to make no change in their plans. They are Boeing Co., with some 12,000 OC workers, and the University of California, Irvine, with 16,000 employees.
“Boeing did analyze its various prescription drug arrangements for Medicare retirees, and concluded it would not be beneficial or necessary to make significant changes in this first year of Medicare prescription drug coverage,” said Brad Chrisman, a company spokesman.
“Most of the plans offered to Boeing’s Medicare-eligible retirees have drug benefits that are better than standard Medicare prescription drug coverage,” Chrisman said.
The University of California decided not to make any change in order to avoid disruption, said Noel Van Nyhuis, a spokesman in UC President Robert Dynes’ office.
“We are not dropping our retiree drug benefit so that retirees must purchase Medicare Plan D on their own,” Van Nyhuis said.
The university’s plans were deemed to be equivalent to the standard Medicare drug benefit, Van Nyhuis said.
Drug coverage often is the most expensive part of retirees’ healthcare benefit packages and one that businesses often fret over. Medicare is getting a drug benefit for the first time in its 40-year history come Jan. 1, a result of President Bush’s signing of the Medicare Prescription Drug, Modernization and Improvement Act in late 2003.
Companies that are offering the drug benefit are trying to entice seniors with relatively low premiums.
Cypress-based PacifiCare Health Systems Inc. is offering three Medicare prescription drug plans with monthly premiums ranging from $19.02 to $54.51, depending on what’s selected, variety of benefits and utilization.
On the dropping coverage issue, PacifiCare is seeing that some of its large employer clients are on the sidelines.
“Because the benefits were put together in early fall and announced to the public so late this year, most employers that we’re talking to were not making a decision this year,” said Tyler Mason, a PacifiCare spokesman. “They negotiate things in late summer for the coming year, so we are not seeing any trend changes.
“However, that could change in ’06 as we go into ’07, when they have a clearer line of sight of the benefits and the costs and they are better able to weigh what coverage options their retirees might have versus the tax credits they get from the federal government,” Mason said.
For businesses that offer drug benefits to their retirees and pay all or most of the premiums the law offers the option of taking a federal subsidy averaging $600 per retiree to either continue coverage or drop it and encourage their retired workers to enroll in Medicare Part D.
“Virtually all of my clients are taking the subsidy,they see it as a better way to deliver what they are delivering today,” said Ron Mason, a principal in consultant Towers Perrin Tillinghast’s Irvine office.
Companies might be more likely to cut back drug coverage for current workers, Mason said.
“Many can’t change with their current retirees,” he said.
West Coast employers might be less likely to face the issue of potentially cutting retiree drug coverage because of the fact that heavily unionized industries are less common here than on the East Coast or in the Midwest, Mason said.
The University of California isn’t contemplating cutting or modifying its retiree drug coverage, Van Nyhuis said.
“This potential strategy must be carefully thought out and widely consulted within the university community even before being considered,” he said.
Sutura Spins Off Device Company
Sutura Inc. of Fountain Valley said earlier this month it plans to spin off its line of HeartStitch medical devices used to repair heart defects as a separate company.
In a release, Sutura said it was going to spin off the heart devices to focus on SuperStitch, its core vascular product.
Details of the spinoff, as well as a name for the spinoff, are set for later this month.
Sutura itself just began trading earlier this year on the over-the-counter bulletin board exchange after going public through a reverse merger with Technology Visions Group Inc., a San Marcos research and development company that had traded on the bulletin board.
Bits and Pieces:
Clarient Inc., San Juan Capistrano, signed a deal with Pfizer Inc., the New York-based drug maker, to offer research services. Under the deal, Clarient’s BioPharma services business unit is providing biopharmaceutical research services, including immunohistochemistry and analysis of rare cells in the systemic circulation DataLabs Inc., Irvine, said it acquired Broadpeak LLC, a West Chester, Pa.-based software company that serves biopharmaceutical and contract research organization industries, for an undisclosed amount Cobalis Corp., Irvine, said that a recently finished, 714-patient clinical trial showed that PreHistin, an allergy medication that it’s developing, significantly reduced symptoms such as sneezing, runny nose, nasal itch and nasal congestion. Cobalis said that it’s planning a second large-scale clinical trial as required by the Food and Drug Administration.
