Although pricing actuaries are trained to project future
costs in environments of heightened risk, COVID-19 has introduced unprecedented
disruption and uncertainty. The pandemic has affected all aspects of the
healthcare industry and the American economy, altering the landscape in ways
that may both increase and decrease expected costs. This volatile and uncertain
environment also presents an extraordinary challenge for health plans
developing rates for 2021 commercial coverage.
This paper by Milliman’s Jeff Milton-Hall, Tom Murawski, and Doug Norris is intended to help commercial health plans navigate this evolving environment. They authors discuss key considerations for how the pandemic and its aftermath could affect the cost of health insurance coverage in 2021.
Medical loss ratio data published by the Centers for
Medicare and Medicaid Services (CMS) provides a detailed picture of insurer
financial results from the fourth full year of Patient Protection and
Affordable Care Act (ACA) implementation. This data, supplemented with CMS
marketplace and statutory financial data through calendar year 2018,
illustrates continued stability in group insurance markets in terms of both enrollment
and insurer financial results. However, the individual market is experiencing
declining enrollment outside the insurance marketplaces and yet significantly
improved financial results for the insurers relative to 2014 through 2016.
Individual market enrollment declines prompted several
state-based initiatives to improve affordability for nonsubsidized consumers.
As of April 2018, seven states have received approval from CMS for a Section
1332 State Innovation Waiver for implementing a state-based reinsurance program
to improve premium affordability. The impetus for these state-based initiatives,
which primarily benefit consumers not qualifying for federal premium
assistance, is supported by a number of national enrollment trends.
- National off-marketplace enrollment for ACA-compliant coverage declined from 4.9 million in 2016 to 2.4 million in 2018.
- Marketplace Advance Premium Tax Credit (APTC) consumers represented 56% of national ACA-compliant enrollment in 2016, increasing to approximately 70% in 2018.
- Marketplace APTC enrollment has remained relatively stable from 2016 to 2018, varying from 8.2 million to 8.6 million across the three-year period.
While individual market enrollment continued to decline in
2018, underwriting margins reported in year-end financial statements indicate
the health insurance industry’s margins improved. The individual market
experienced a nearly 10% underwriting loss in 2015 compared to underwriting
gains likely approaching 10% in 2018.
This report, written by Paul Houchens, Jason Clarkson, and Jason Melek, provides a detailed review of the commercial health insurance industry’s financial results in 2017 and evaluates changes in the market’s expense structure and enrollment relative to prior years. It also discusses emerging financial trends for the commercial health insurance markets.
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.
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.
Over 25 million American adults report suffering from chronic pain on a daily basis, and a range of adverse health outcomes accompanies their pain. Beginning in the early 2000s, opioid analgesics were increasingly seen as a solution to the problem of under-treatment that had been a concern in the 1990s. From 1991 to 2011, the number of opioid prescriptions filled at U.S. retail pharmacies nearly tripled, increasing from 76 million to 219 million per year, though those numbers have started to decrease since the peak in 2011.
Despite the recent decrease in prescriptions of opioids, the human toll of the opioid crisis has continued to intensify. Illegally acquired heroin and synthetic opioids such as fentanyl have become the leading cause of overdose deaths. Opioid overdose deaths are now the single largest factor slowing the growth in U.S. life expectancy, and if current trends continue, opioid overdose deaths could outnumber suicides by 2019.
In this article, Milliman’s Stoddard Davenport and Katie Matthews help explain the scale of the opioid epidemic within the insurance industry.
Based on a sample of over 42 million people with commercial insurance, nearly 1.3 million Medicare beneficiaries, and a Kaiser Family Foundation analysis of Medicaid beneficiaries in 49 states, we estimate that over 1.5 million insured Americans were diagnosed with an opioid use disorder in 2015 (the most recent year available). Figures 3 and 4 summarize these findings by payer. These results (and others presented throughout this report) have been age- and area-adjusted to be representative of the U.S. insured population as of 2015 using U.S. Census Bureau data.12
Figure 3: Diagnosed opioid use disorder by payer, 2015 (or most recent year)
We found that about 41.4% of those with diagnosed opioid use disorder were commercially insured, 15.9% were Medicare beneficiaries, and 42.7% were Medicaid beneficiaries. Overall, the diagnosed prevalence rate of opioid use disorder was 3.28 per 1,000 for the commercially insured, 5.39 per 1,000 for those with Medicare, and 8.90 per 1,000 for those with Medicaid. Across all insurance payers, we found that the prevalence of opioid use disorder was 4.91 per 1,000.
Figure 4: National estimates of opioid use disorder diagnosis by payer, 2015 (or most recent year)
||Diagnosed prevalence per 1,000
||Total diagnosed nationally No. (%)
The authors also highlight the rate of opioid use disorder by age and sex.
Rates of opioid use disorder varied widely by age and sex, with men generally experiencing higher rates of opioid use disorder through age 65, and women experiencing higher rates from 66 and older. Rates were quite low through childhood, followed by a marked increase in the late teen years, peaking in the mid-20s at a rate of 5.47 per 1,000 for women (at age 24) and 10.00 per 1,000 for men (at age 25). Rates showed a sharp drop-off in the late 20s, followed by a rise to another peak in the mid-30s of about 3.76 per 1,000 for women (at age 35) and 6.37 per 1,000 for men (at age 36). From the late 30s through age 64, the gap between men and women closed and both experienced prevalence rates hovering between 3.50 to 4.00 per 1,000 through retirement age. Opioid use disorder rates for Medicare beneficiaries were generally higher for women than for men, and tapered off with advancing age. Comparable data for Medicaid were not available.
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.