Category Archives: Reform

Don’t TrOOP off the cliff

With the passage of the Patient Protection and Affordable Care Act (ACA) came a modification to how the true out-of-pocket (TrOOP) amount was calculated through 2019. With significant changes to Medicare Part D from the Bipartisan Budget Act of 2018 and the Centers for Medicare and Medicaid Services (CMS) Final Rule, one provision from the ACA that has gone largely unnoticed is the forthcoming TrOOP cliff in 2020, for which plan sponsors should prepare. Milliman actuaries Van Phan and Todd Wanta provide some perspective in this paper.

How will the elimination of the individual mandate affect enrollment rates?

The requirement that every American have healthcare coverage or pay a financial penalty was one of the key provisions of the Patient Protection and Affordable Care Act (ACA). Known as the individual mandate, it was one of the most controversial provisions of the ACA. Some questioned its legality and others questioned its effectiveness at driving insureds into the insurance pool.

The U.S. Supreme Court settled the issue of the mandate’s legality in 2012, ruling that attaching a financial penalty to a failure to purchase health insurance did not run afoul of the U.S. Constitution. This decision, though, did not settle the issue of its effectiveness. And in late 2017, Congress enacted the Tax Cuts and Jobs Act, which reduced the financial penalty to $0 beginning with the 2019 mandate year, effectively eliminating the individual mandate.

Understanding the impact of this change on the health insurance risk pool is important to both insurers offering ACA-compliant products and state policy makers evaluating alternatives to the individual mandate. Health insurers—now in the process of setting rates for 2019—need to understand how elimination of the individual mandate penalty will affect future enrollment rates, which have a significant impact on rate projections. Some states are considering implementing state-based individual mandates, in some cases in conjunction with a Section 1332 State Innovation waiver.

In this paper, Milliman’s Andrew Bourg, Fritz Busch, and Stacey Muller discuss the significance of the individual mandate and model the impact of eliminating it.

Commercial health insurance: Overview of 2016 financial results and emerging enrollment and premium data

In this report, Milliman’s Paul Houchens, Jason Clarkson, and Jason Melek provide a detailed review of the commercial health insurance industry’s financial results in 2016 and evaluate changes in the market’s expense structure and enrollment prior to relative years. They also provide enrollment and Advanced Premium Tax Credits estimates for 2017.

Implications of proposed changes to short-term medical plans

In February 2018, the Departments of Health and Human Services (HHS), Labor, and the Treasury released a proposed rule that would change the maximum duration of short-term, limited-duration insurance (STLDI) policies. Under the proposed rule, STLDI plans, or “short-term medical” plans, may emerge as an alternative form of individual health insurance. In this article, Milliman actuaries Jason Karcher and Nick Ortner discuss the proposed changes and the potential effect they might have on the individual health insurance market.

UAE: Transforming healthcare through blockchain technology

The United Arab Emirates (UAE) aims to be the first blockchain-powered government by 2020. Programs are already being piloted for migrating key government processes, including healthcare records, to the blockchain.

Dubai has invested significantly in transforming its healthcare infrastructure. Blockchain technology is the catalyst set to overhaul the current healthcare system and improve upon its current limitations. The blockchain has the potential to control medical costs, improve quality of care, and enhance the overall health and happiness of Dubai’s residents.

Lessons from Dubai’s blockchain initiative may have far-reaching implications on the work of health actuaries in the UAE and across the world. Actuaries and stakeholders need to consider the downstream effects of a blockchain-powered government and healthcare system.

Milliman’s Julia Kong explains the key features of the blockchain, which could enable stakeholders to overcome existing healthcare challenges, in her paper “Blockchain UAE: Global healthcare implications.”

The individual mandate repeal: Will it matter?

The individual mandate is one leg of the “three-legged stool” of the Patient Protection and Affordable Care Act (ACA). During the crafting of healthcare reform, insurers and other market experts contended that the mandate was absolutely necessary for a functional individual guaranteed issue market. With the passage of the Tax Cuts and Jobs Act of 2017, there are renewed concerns related to the stability of the individual market.

Milliman consultants Fritz Busch and Paul Houchens believe that the individual mandate’s financial penalties at face value are high enough to induce high insurance participation rates, but that the enforcement of these penalties has not been strict enough to fully achieve the mandate’s policy aims. They say that available premium assistance in the insurance marketplaces may provide sufficient financial incentives to prevent a collapse of marketplace enrollment rates resulting from the mandate’s repeal. In their paper, Busch and Houchens examine available empirical data to arrive at this conclusion.