Category Archives: Reform

Commercial health insurance financial results provide insight into Affordable Care Act program stability

Milliman has released its annual report on the commercial health insurance market’s financial results, which provides a clear picture of health insurers’ financial experience in a given year. The report, based on medical loss ratio data submitted to the Centers for Medicare and Medicaid Services and released in the fall of 2016, provides a final accounting of insurers’ financial results after “3R” transfer payments have been completed. Today’s report details results for 2015, the second full year of implementation of the Patient Protection and Affordable Care Act (ACA). The report also summarizes estimated effectuated insurance marketplace enrollment through 2016 and corresponding federal expenditures on premium and cost-sharing assistance. As the United States approaches a potential new round of healthcare reform, Milliman’s report is a helpful tool in analyzing the effect of current ACA financial assistance components to consumers and the impact on the health insurance industry from the insurance marketplaces and “3R” programs.

Key takeaways from Milliman’s report include:

• Underwriting margins in the individual market deteriorated from a 6.0% earned premium loss in 2014 to a 9.6% loss in 2015. 2015 underwriting losses were due in large part to the risk corridor program funding shortfall.
• With no funding currently scheduled, the cumulative risk corridor payment shortfall has reached $8.3 billion with nearly 90% owed to insurers in the individual market.
• Since 2013, individual market enrollment has increased from 10.9 million to 17.5 million driven by the introduction of the insurance marketplaces and associated premium assistance. Conversely, the fully insured small group enrollment has shrunk from 17.3 million to 14.7 million attributable primarily to fewer small employers offering coverage.
• The insurance marketplaces continued to take on a greater role in the individual health insurance market with 56% of estimated 2016 market-wide enrollment attributable to coverage purchased in the marketplaces relative to only 36% in 2014.
• From 2014 to 2016, the percent of individual market enrollees receiving premium assistance has increased from 31% to 47%. Similarly, enrollment in cost-sharing reduction plans is estimated to have increased from 21% to 32% of national individual market enrollment.

Milliman’s overview of financial results provides a comprehensive look at insurers’ financial experience as well as the number of Americans impacted by marketplace subsidies under the Affordable Care Act. As new healthcare proposals are debated in Washington, we believe this report provides a valuable tool for policymakers and insurers looking to better understand how insurance markets may react to future regulatory and legislative changes.

To receive regular updates of Milliman’s healthcare reports, contact us at here.

How to stabilize the ACA marketplace ahead of change

Any upcoming changes to the Patient Protection and Affordable Care Act (ACA) will not likely be fully implemented until 2019 or 2020. The stability of the individual and small group health insurance markets during this period of transition will depend on the regulatory changes that are made in the interim and the transparency of those changes.

A new paper by Milliman’s Lindsy Kotecki and Hans Leida presents five key considerations for promoting market stability for the 2018 and 2019 benefit years under the assumption that they are transitional years with many current ACA rules in effect.

1. Don’t collapse the stool.
2. Extend risk mitigation programs.
3. Extending the transitional policy.
4. Consider interim rule changes carefully.
5. Transparency is key.

New “three Rs” and ACA marketplace considerations

Commercial health issuers should develop contingency plans as legislative proposals designed to modify the Patient Protection and Affordable Care Act (ACA) emerge. While the direction of the ACA marketplace is uncertain now, health plans can proactively evaluate the risks and rewards of various contingency plans to act quickly once the new market environment becomes clear.

Milliman actuaries Amy Giese and Alison Fasching have authored a new paper offering issuers considerations for commercial contingency planning. In the paper, the authors explore the following new “three Rs” to mitigate risk in the current environment:

Remain in the market
Refile in the summer if changes occur after products are initially filed
Remove products from the market

To learn more about the developing healthcare landscape in the U.S., follow Milliman Healthcare reform 2.0.

Actuarial Challenge webinar

The Robert Wood Johnson Foundation and Milliman are cohosting a webinar on Monday, February 27 at 2 p.m. ET to summarize and discuss the results of round one of the Actuarial Challenge. Round two activities will also be noted.

The webinar will look at the various types of proposed reforms in the Round One papers, noting common suggestions as well as proposed changes that are more unique.

On February 15, the Actuarial Challenge issued an announcement of its Round One results. The announcement provided a summary of each of the 14 papers submitted during the Challenge. You can find a copy of the announcement posted on the Actuarial Challenge website.

To participate in the WebEx webinar, use the following information:

Meeting number: 636 329 625

Or join by phone toll-free: 1-866-913-6864 (US)
Conference Code: 262 796 3471

Mini-medical plans and the “what can I afford” question

Prior to the Patient Protection and Affordable Care Act (ACA), mini-medical plans had no standard meaning, though they typically shared a few characteristics. Such plans provided limited coverage that could be exhausted quickly and/or result in significant out-of-pocket expenses if enrollees needed comprehensive services.

Total annual benefit limits may have been as high as $250,000 with more typical limits ranging from $10,000 to $50,000. Coverage was provided on an expense-incurred basis and used for traditional comprehensive health insurance, with lower premiums the trade-off for dollar-value benefit levels that fell below traditional health insurance.

The ACA effectively eliminated the expense-incurred mini-med market with the prohibition of annual limits on essential health benefits. What role might mini-med plans play in a post-ACA environment? Milliman’s Nick Ortner provides perspective in his article “What can I afford? Mini-med 2.0 and cost-coverage questions in a post-ACA world.”

Substantial amount of ACA plans’ revenue comes from cost-sharing payments

Politico Pulse cited a new study performed by Milliman that examines cost-sharing reduction (CSR) subsidies under the Patient Protection and Affordable Care Act (ACA). The study was commissioned by the Association for Community Affiliated Plans.

Here’s the excerpt from the morning briefing:

FIRST IN PULSE: COST-SHARING SUBSIDIES ARE A SIGNIFICANT SHARE OF OBAMACARE REVENUES — Cost-sharing subsidies accounted for 7.8 percent of health plan revenues for customers enrolled in Obamacare plans in 2015, according to a new study commissioned by the Association for Community Affiliated Plans.

The study conducted by Milliman also found a huge discrepancy between states that expanded Medicaid and those that didn’t. Cost-sharing subsidies accounted for 4.8 percent of revenues in expansions states, but that share more than doubled in states that didn’t expand coverage. The amount of money at stake: $4.9 billion in assistance to 5.2 million exchange customers in 2015.

Why it matters: The future of the cost-sharing subsidies is in limbo. House Republicans sued to block the funding and won an initial court battle. But they’re being pushed by health plans to continue the payments now that they’re in control of the federal government. Otherwise, insurers warn, the Obamacare markets could collapse on their watch. “The loss of CSR payments in 2017 would trigger significant losses for many insurers in the individual market,” the study concludes. Read the report here.