Tag Archives: Jason Karcher

Law and Executive Order: A look at how President Trump’s executive order on healthcare impacts the ACA’s small group and individual markets

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.

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.

Exploring the future of CSR subsidies

The potential nonpayment of cost-sharing reduction (CSR) subsidies to health insurers, as required by the Patient Protection and Affordable Care Act (ACA), could create instability in the individual market. Issuers are now contemplating their exchange participation plans for 2018, and the future of cost-sharing reductions will play a key role in their decisions. This report by Milliman’s Pedro Alcocer, Frederick Busch, and Jason Karcher explores the possible legislative and regulatory outcomes and potential issuer responses.

What implications must the health insurance industry consider regarding the American Health Care Act?

In 2010, then-President Obama signed into law the Patient Protection and Affordable Care Act (ACA). In 2017, it’s déjà vu all over again, as the U.S. House of Representatives has passed the American Health Care Act (AHCA), which would significantly amend large portions of the ACA if it becomes law. While this bill has not yet been through the U.S. Senate and will almost certainly change before President Trump can sign it into law, the policies proposed in this legislation would make many changes to the health insurance sector.

In this paper, Milliman actuary Jason Karcher explores the effects that the May 4, 2017, version of this House bill may have on different markets and stakeholders in the healthcare and insurance ecosystem.

Evaluating risk adjustment transfer payments

Risk adjustment transfer payments continue to have financial implications on insurers in the commercial individual and small group marketplaces. In this analysis, Milliman consultants provide an overview of 2015 transfer payments, comparing them against 2014 results. The authors also explore the following conclusions from their report.

• Total risk adjustment transfer payments at the national level remained at about 10% of premium in the individual market and 6% of premium in the small group market.
• Roughly one in four issuers offering plans in a given state or market in both 2014 and 2015 switched between payer and receiver status.
• Statewide risk scores rose more year-over-year than the movements in market demographics and average plan benefit richness would have suggested.
• Where available, the interim risk adjustment report did not provide a reliable indication of the ultimate value of the 2015 risk score.

Transitional policies result in higher medical loss ratios

A new Milliman analysis shows that the percentage of transitional policy members in a state’s health exchange market appears to correlate with higher medical loss ratios. In the analysis, Milliman consultants Erik Huth and Jason Karcher quantify the effect that transitional policies had on issuers’ 2014 individual market performances and how it may result in 2017 rate increases for transitional states.

Here’s an excerpt:

The table in Figure 3 shows that issuers in transitional states had higher 2014 loss ratios but appear to not have taken large enough 2015 and 2016 rate increases to achieve profitable 2016 loss ratios (assuming 2014 to 2016 significant cost savings are not realized in other ways). Although issuers’ 2017 rate increases will reflect their 2015 experience and updated projections, there is potential for transitional states to see higher rate increases in 2017.

Figure 3

The graph in Figure 4 shows the 2014 ACA loss ratio and the average 2014 to 2016 statewide QHP base rate change for each state. The gray line represents an illustrative 2014 to 2016 rate increase needed to target an 85% 2016 loss ratio given the 2014 loss ratio and assuming a 5% annual claim trend. For example, a state with an 85% 2014 loss ratio would require a 10.25% 2014 to 2016 rate increase to target an 85% 2016 loss ratio (i.e., 5% annual rate increases to cover the 5% annual claim trend to maintain the 85% loss ratio). States well underneath the line indicate a possible need for higher 2017 increases than states closer to the line. Keep in mind that projected 2016 loss ratios are merely illustrative. There are many factors that will affect a state’s overall 2016 loss ratio and required 2016 and 2017 rate increases, such as, but not limited to, changes in experience and statewide morbidity levels, wear-off of pent-up demand, provider contracting, claim trends, population migration and characteristics, and product and issuer mix. These values also represent a statewide composite, while specific issuers could have materially different results than the average.

Figure 4