Category Archives: Reform

Selling insurance across state lines: Intended and unintended consequences

Proponents believe that selling 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.

Risk adjustment modifications in view of potential CSR subsidy termination

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.

Pairing risk adjustment to support state 1332 waiver activities

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.

America’s relationship status with healthcare: It’s complicated

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.

The old and the beautiful: How age and gender affect costs and premiums in commercial healthcare

We generally consider living a long life an important goal, and it certainly does beat the alternative. But one side effect of getting older is that, as we age, we typically acquire additional acute and chronic medical conditions, and the prevalence of many common chronic medical conditions increases significantly. Age/gender rating is an area in which actuarial considerations are often in direct tension with social or public policy considerations: there is a natural tension between the policy goals of making coverage more affordable for older people (with higher average costs) and the goal of encouraging younger people (with lower average costs) to purchase health insurance coverage.

In an article first published in the magazine The Actuary, Milliman consultants Doug Norris, Hans Leida, Erica Rode, and Travis (T.J.) Gray explore how age and gender affect costs and premiums in commercial healthcare.

Introducing the SSIP: Provisions for market stabilization in the Better Care Reconciliation Act

On June 22, the U.S. Senate released its draft of a bill to amend portions of the Patient Protection and Affordable Care Act (ACA), called the Better Care Reconciliation Act (BCRA). The State Stability and Innovation Program (SSIP), part of the BCRA, is a grant program that provides funds directly to insurers as well as to states with the primary goal to stabilize and support the individual market. The SSIP is composed of two distinct parts. The first provides funds for short-term market stabilization programs that will go directly to insurance carriers in the first four years of the program. The second provides funds for the “Long-term SSIP,” which will be allocated to states starting in 2019 to fund various programs.

This paper by Milliman’s Thomas Murawski discusses elements of the SSIP and outlines the details from the draft bill released on June 22.