The Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States, signed by President Trump on October 12, could have a significant effect on both the individual and small group health insurance markets. The extent of any impact on either market will vary depending on how the executive order is interpreted and implemented by administrative agencies as well as whether those interpretations hold up to legal challenges.
This article by Milliman consultants Fritz Busch, Erik Huth, Nicholas Krienke, and Jason Karcher summarizes the executive order and analyzes key considerations and potential impacts for commercial health plans.
Healthcare providers are measured on certain performance metrics that dictate their payment amounts under value-based contracts. Risk adjustment plays an integral role in determining financial performance. In order for these contracts to be equitable for insurers and providers, risk adjustment must accurately capture changes in population morbidity to effectively measure the provider’s true cost impact.
In this article, Milliman’s Rong Yi, Howard Kahn, and Jared Hirsch highlight common data issues that affect risk scores. They also discuss practices that can improve coding efforts related to risk adjustment.
Proponents believe that selling insurance across state lines without being subject to state-specific regulations would increase competition and lower insurance costs. This proposed change could result in critical intended and unintended consequences, which depend greatly on policy intent and design. Milliman consultant Susan Philip provides some perspective in this article.
If the cost-sharing reduction (CSR) subsidies of the Patient Protection and Affordable Care Act (ACA) were eliminated, it could expose insurance carriers to a substantial increase in selection risk related to their particular mixes of business. In August, the Centers for Medicare and Medicaid Services (CMS) announced its intention to propose a set of risk adjustment modifications for states in which insurance carriers raise silver premiums in response to potential CSR subsidy termination.
In this paper, Milliman’s Jeffrey Milton-Hall, Doug Norris, and Jason Karcher explore the CMS proposal along with the current ACA risk adjustment program and three other potential alternative modifications to risk adjustment in response to the possible elimination of CSR funding.
Section 1332 of the Patient Protection and Affordable Care Act (ACA) allows states, starting in 2017, to waive certain ACA market rules to allow for more tailored commercial individual and small group market solutions. When states consider market reforms such as reinsurance under the 1332 Waiver with the aim of stabilizing the market and providing affordable coverage, it is important to consider the challenges and options in the context of their effects on other market stabilization mechanisms like risk adjustment. Milliman consultant Rong Yi offers some perspective in this paper.
Financing and regulating healthcare in the United States is complicated. Fortunately, actuaries understand the intricacies and can provide unique perspectives to address the system’s complex challenges. In the article “Healthcare: It’s complicated,” Milliman’s Hans Leida and Lindsy Kotecki discuss issues related to reform that actuaries have helped navigate.
Here is an excerpt:
Besides predictability problems caused by regulatory or political factors, two challenges facing health actuaries during these transitional years have been (1) the lag between when market changes are implemented and when data on policies subject to the new rules becomes available, and (2) the difficulty in predicting consumer behaviour in reaction to major changes in market rules such as guaranteed issue and community rating. How many of the uninsured would sign up? How price-sensitive would members be when they renewed their coverage each year? How will changes in other sources of coverage (such as Medicaid expansion) impact the individual market? How will potential actions by competitors affect an insurer’s risk?
Despite the daunting nature of these challenges, actuaries have, out of necessity, found ways to try to address them. For example, faced with the data lag problem, they explored ways to augment traditional claim and enrollment data with new data sources such as marketing databases or pharmacy history data available for purchase. Such sources can be used to develop estimates of the health status of new populations not previously covered by an insurer. Many actuaries also developed agent-based stochastic simulation models that attempted to model the behaviour of consumers, insurers and other stakeholders in these new markets. Such models continue to be used to evaluate the potential outcomes of future changes to the healthcare system, and will probably be essential should efforts to repeal and replace the ACA prove successful.