The Patient Protection and Affordable Care Act (ACA) brought extensive changes to the health insurance market. Accolades as well as concerns have been raised by stakeholders as the marketplace evolves under the new structure. While policy-makers and politicians analyze the strengths and weaknesses of the individual health insurance marketplace, the Robert Wood Johnson Foundation is working with Milliman, among the world’s largest providers of actuarial services, to identify potential improvements to increase its stability.
In partnership with the American Academy of Actuaries and the Society of Actuaries (SOA), the Actuarial Challenge urges health actuaries to propose new ideas and different approaches to increase stability in the individual health insurance market, further moving the market toward universal access to quality, affordable health services. The potential Challenge participants include, but are not necessarily limited to, actuaries employed by:
• Health insurance companies and health maintenance organizations (HMOs)
• Healthcare providers (health systems, hospitals, physician groups)
• Pharmaceutical companies and pharmacy benefit managers (PBMs)
• Actuarial professional organizations
• Health actuarial consultants
• Colleges and universities with actuarial science programs
But before proposals are developed, teams compete, and finalists are
selected for simulations, potential Challenge participants are invited to join the #ActuarialChallenge Twitter chat on Friday, October 21, 1 p.m. ET.
• Joel Ario, Managing Director, Manatt Health
• Kathy Hempstead (@KHemp64), Senior Advisor, Robert Wood Johnson Foundation
• Stacey Muller (@StaceyMullerFSA), Principal and Consulting Actuary, Milliman
• Jim O’Connor (@JimOConnorFSA), Principal and Consulting Actuary, Milliman
Despite millions of Americans gaining health insurance coverage in the last several years, healthcare costs have continued to increase, provider choice has become increasingly restricted, and, in some cases, the quality of provider networks have come into question. You can help explore new approaches that can increase stability in the health insurance marketplace during the Twitter chat on October 21. Follow the Twitter hashtag #ActuarialChallenge.
U.S. Department of Health and Human Services (HHS) data shows that 55% of individuals who have enrolled in a health exchange plan are women. Men, who make up 53% of the uninsured population, account for 45% of exchange plan enrollees.
Citing an America’s Health Insurance Plans (AHIP) report by Milliman, this Washington Post article considers how banned gender rating rules may be influencing men’s enrollment decision. Here’s an excerpt from the article:
Before the Affordable Care Act’s major insurance market reforms took effect this year, gender rating was allowed – meaning insurers could charge women more than men. A 2012 report from the National Women’s Law Center found that gender rating cost women $1 billion more than men, even before maternity costs were taken into account. The law now requires insurers to ignore gender when they price plans, meaning women will get a better deal. It also means that men, particularly young adults who were already purchasing insurance in the individual market, could face higher costs this year.
A Milliman report prepared for America’s Health Insurance Plans last year projected that the ACA’s new gender rules would drive down premiums between 13 percent and 19 percent for women younger than 40. The actuarial firm also found men in the same age bracket would see premiums go up 18 percent to 31 percent.
The Post also quotes Jim O’Connor discussing the possible effects gender ratios could have on rates in 2015.
If women can no longer be charged more and women are signing up at higher rates, does that mean we can expect an increase in insurance rates next year?
We already know that rates are going up in 2015, just like any other year. How much they’ll go up depends on a number of factors beyond gender, including how accurately insurers were able to predict their 2014 enrollment mix. Remember, the health law also includes several premium stabilization programs intended to head off massive rate hikes.
Actuaries I talked with had predicted different gender ratios for the 2014 enrollment period. Milliman’s Jim O’Connor, who authored the report for AHIP, said he had expected a 52:48 female-to-male ratio in 2014. He said it’s not clear how that will factor into 2015 rates.
“It’s hard to say what [insurers] will think,” O’Connor said. “The expectation is if young males sat out in 2014, maybe more of them will come in 2015 especially when they see they’re getting the tax penalty for sitting out.”
The U.S. Department of Health and Human Services (HHS) recently published a report showing that 3.3 million individuals have selected plans offered on health exchanges. According to this Bloomberg BNA article, insurers may—contrary to public opinion—face greater cost implications from the gender mix than they do from the age mix. Milliman’s Jim O’Connor, who was interviewed for the article, provides some perspective:
There’s been improvement in the numbers,” James O’Connor, a principal and consulting actuary in the Chicago office of Milliman Inc., told Bloomberg BNA. “The most noteworthy thing, though, is the gender difference.”
In a report released Feb. 12, the Department of Health and Human Services said that 55 percent of the nearly 3.3 million people who selected qualified health plans in the marketplaces from the beginning of open enrollment Oct. 1, 2013, to Feb. 1, 2014, are female and 45 percent are male. The first open enrollment period under the ACA lasts until March 31.
“You would expect something closer to 50-50,” O’Connor said. “Probably carriers may have assumed that more females would be coming in than males. But probably not a 10-point difference.”
Costs for Women Higher
The ACA bars insurers from discriminating against people based on gender as of 2014. Previously, women were charged more because their healthcare costs are considerably higher than men’s, particularly costs for women between the ages of 25 and 45, O’Connor said. “We see that a young female could be twice the cost of a young male,” he said.
There has been a lot of talk about whether healthcare premiums are going to increase or not under the Patient Protection and Affordable Care Act (ACA). With that in mind we’ve put together a list of articles and studies that should help increase awareness of how health reform may affect premium rates.
• KearneyHub.com – Will next year’s insurance premiums go up or down?
Many individuals are interested to know if health exchange premiums are going to increase or decrease in 2015. This article quotes Milliman’s Jim O’Connor discussing how 2014 rates will influence next year’s rates. The article also points out certain variables that may increase rates.
• Columbia Journal Review – What’s health insurance really going to cost?
CJR reporter Trudy Lieberman identifies seven tips to help individuals understand factors that will contribute to the setting of health exchange rates in 2015.
• Wall Street Journal – Health Plans Rush to Size Up New Clients (subscription required)
This Wall Street Journal article provides perspective on how insurers are gathering data from health plan enrollees to help set future premiums. The article quotes Milliman’s Tom Snook:
“In the past, the whole game was about risk selection,” said Tom Snook, an actuary with Milliman Inc. who works with insurers offering plans on public exchanges. “Now the game’s all about risk management.”
• Columbia Journalism Review – Untangling Obamacare: Rate shock
This article considers several issues of interest to the public related to “rate shock” and the affordability of premiums.
• Columbia Journalism Review – Untangling Obamacare: What’s behind the rate increases?
The Columbia Journalism Review (CJR) aims to help individuals understand factors that are affecting how health coverage is priced.