National Health Protection Scheme: Short-term and long-term challenges

India’s National Health Protection Scheme (NHPS), when fully implemented, will be the largest of its kind in the world and is likely to be a boon for Indian healthcare consumers. The short-term and long-term challenges of the NHPS should be reviewed and tackled differently by each stakeholder—the central government, state governments, the provider community, and the insurer community. Milliman’s Abhishek Agrawal provides more perspective in this paper.

Healthcare costs for typical American family reach $28,166 despite low annual rate of increase

Milliman today released the 2018 Milliman Medical Index (MMI), which measures the cost of healthcare for a typical American family of four receiving coverage from an employer-sponsored preferred provider plan (PPO). In 2018, costs for this family will increase by 4.5%, approaching the lowest rate on record. Last year’s 4.3% increase was the lowest in the MMI’s 18 year history, and points to the recent deceleration in healthcare cost increases.

“There are two ways of looking at this year’s MMI,” said Chris Girod, co-author of the Milliman Medical Index. “On the one hand it’s heartening to see the rate of healthcare cost increase remain low. On the other hand, we’re still talking about more than $28,000 in total healthcare costs for the typical American family.”

So is the American healthcare system bending the cost curve? What could be behind this apparent moderation in the annual rate of increase?

“We asked key stakeholders across the healthcare system what might be driving the decline in growth rates,” said Sue Hart, co-author of the MMI. “Several common themes emerged, in particular provider engagement, more effective provider contracting, value-driven plan design, and spillover effects from public program initiatives.”

For the third straight year, prescription drug cost trends are down, though at 6% the rate of increase still exceeds other components of the MMI.

“Prescription drug costs have steadied, but this trend is volatile and hard to predict,” said Scott Weltz, co-author of the MMI. “High-cost drugs can have a big impact on trends, as we witnessed a few years ago when hepatitis C treatments hit the market. Alternatively, point-of-sale rebates could push a consumer’s costs in the other direction, particularly for people taking high-cost drugs. As the environment evolves, changes in drug prices can be deployed quite quickly.”

To view the complete MMI, click here.

Medicaid buy-in and Section 1332 State Innovation Waiver considerations

Some states are looking for ways to offer more comprehensive or lower-cost health insurance on the individual market and to entice more of those currently uninsured to purchase coverage. One option currently getting the attention of states is Medicaid buy-in.

A Medicaid buy-in option is different from Medicaid expansion efforts under the Affordable Care Act (ACA). A Medicaid buy-in approach can build on a state’s existing Medicaid program infrastructure and offer a Medicaid-like plan to specified residents.

Under a Medicaid buy-in proposal, the core target population would typically be those who are purchasing insurance using advanced premium tax credits (APTCs) or who are eligible for APTCs but uninsured. A Medicaid-buy in may allow individuals not eligible for commercial group coverage to purchase a Medicaid-like plan. This type of proposal may allow a state to replace or augment the current insurance marketplace and ACA premium assistance structure under federal waiver authorities.

States could use their own funds and/or leverage federal funding to develop a buy-in program authorized by a Section 1332 State Innovation Waiver. A state’s goals for a Medicaid buy-in through a 1332 Waiver could be further supported by a Section 1115 Demonstration Waiver or other Medicaid coverage changes.

In this paper, Milliman’s Paul Houchens, Christine Mytelka, and Susan Philip discuss buy-in proposals, exploring the opportunities at a high level and laying out key considerations for states as they weigh their options.

Medicare Advantage and Part D actuarial compliance considerations

Operating Medicare Part C and Part D plans has become increasingly complicated. The Affordable Care Act and a growing number of rules and regulations added each year have heightened the complexity and associated compliance burden for the health insurance companies that sell and administer these plans.

Actuaries are instrumental in developing the bids that plan sponsors submit annually to the Centers for Medicare and Medicaid Services (CMS). Those bids include a plan benefit package and Part C and Part D bid pricing tools. The bid submission also includes a set of supporting documentation describing how the financial projections were developed and demonstrating compliance with the many bidding rules.

During desk review, CMS independently confirms that the bids pass compliance tests. It is critical that plan sponsors understand the tests and confirm compliance before bids are submitted.

In this paper, Chris Girod and Shyam Kolli discuss a relatively narrow area of rules that is sometimes loosely referred to as actuarial compliance. This information can be useful for actuaries and other professionals who are tasked with understanding and following the many rules and regulations as they relate to Parts C and D.

Utilizing LTC projection methods

Estimating future claims usually entails using historical data as a starting point to develop an assumption about the future. Developing financial projections of long-term care (LTC) insurance utilization is similar. In this article, Milliman’s Jeremy Hamilton and Tim Kempen focus on two methods for using current utilization levels to develop utilization assumptions for future durations: an “average utilization” method and a “distribution” method. They also outline the advantages and disadvantages of both methods.

Regulatory roundup

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

IRS inflation adjusted amounts for HSAs in 2019
The Internal Revenue Service (IRS) released Revenue Procedure 2018-30, which provides the inflation-adjusted amounts for health savings accounts (HSAs) for calendar year 2019. The updated limits specify the maximum annual contributions to HSAs that may be tax deductible, as well as the minimum deductibles and the maximum out-of-pocket expenses allowed under qualifying high-deductible health plans (HDHPs).

For more information, click here.