Investing October 30, 2001

European Exchange Consolidation To Continue

October 30, 2001(PLANSPONSOR.com) - Technological advances and the globalization of capital markets will force European stock exchanges to consolidate, resulting in a single pan-European clearing-house by 2006, according to industry professionals polled by Accenture.
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Increased competition, fragmented liquidity, redundancy, and eroding margins will also spur this consolidation.

That trend was in evidence yesterday, as Euronext, itself the result of a merger of bourses in Paris, Amsterdam and Brussels – won the fiercely fought battle for the Liffe derivatives exchange in London, Europe’s number two derivatives exchange. The London Stock Exchange’s failure to win Liffe now makes the LSE vulnerable to takeover, according to some analysts.

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The Accenture study, titled “Leaving Safe Havens” concludes that many national stock exchanges worldwide may soon be a thing of the past. Cross-border collaboration will be more important than ever to build the efficiencies and liquidity necessary to survive changes in the global exchange landscape.

According to the study, which was based on interviews with European investment professionals, exchange and clearing consolidation will benefit:

  • investors by bringing better price discovery and a lower execution costs, particularly with cross-border trades,
  • issuers, providing easier access to global capital and improved liquidity,
  • exchanges, by enabling them to achieve economies of scale, build efficiencies in aggregation, leverage IT investments, reduce inefficiencies and offer better liquidity
Benefits October 29, 2001

Provider, Political Pressures Push Health Costs Higher

October 29, 2001 (PLANSPONSOR.com) - The Segal Company forecasts that retail prescription drug coverage should experience a 19.4% trend rate increase for active members and retirees under age 65 and a 20.5% trend rate for retirees over the age of 65.
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In 2002, prescription drugs are expected to comprise 18% of the total medical cost, up from 10% in 1995, according to the 2002 Segal Health Plan Cost Trend Survey

Mail order prescription costs are expected to climb 18.8% next year. Still, the cost increases for drugs in 2001 are currently just 15% versus a projected 20%. However, the full impact of the terrorist attacks and aftermath is not yet reflected in these results.

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Healthcare Costs “Pressured”

On the other hand, trends for non-network fee-for-service (FFS), preferred provider organization, point-of-service and health maintenance organization (HMO) plans are all now projected to be greater than 2001 trend forecasts. The medical cost trend rates in 2002 are projected to be 1 to 3 percentage points higher than Segal’s 2001 projections.

Actual 2001 HMO cost increases exceeded projections by over 4 percentage points and grew faster than the other providers’ costs for the first time since 1997, according to the report.

The survey forecast that overall medical cost trend rates for 2002 would rise:

  • 16.4% for non-network fee-for-service plans
  • 14% for PPOs
  • 13.5% for point-of-service plans
  • 12.8% for HMOs.

The reports notes that managed care plans are raising provider reimbursement levels and liberalizing plan rules for participants in response to political and provider pressures.

Control Caps

Segal notes that the ability of managed care to control medical cost increases has eroded due to:

  • consumer-directed prescription drug marketing
  • higher provider reimbursements
  • liberalization of plan rules
  • increased regulation
  • aging of the workforce

Consequently, to contain health care costs, plan sponsors will have to adopt strategies that increase members active involvement as cost conscious consumers and hold providers accountable.

The firm surveyed approximately 150 payers across the country, which individually provide care to memberships of between 100 and 50,000 workers.

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