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. The authors discuss key considerations for how the pandemic and its aftermath could affect the cost of health insurance coverage in 2021.
The economic ramifications of
the COVID-19 pandemic are just starting to be felt and will likely intensify
for some time to come. For dental offices, whose production is closely tied to
consumer disposable income, an economic recession can cause major changes in
patient traffic and the types of services sought.
While an economic downturn alone affects demand for dental services, this time the downturn is preceded by a period of depressed demand for services due to provider-driven, patient-driven, and broader community-driven efforts to limit the spread of COVID-19. As such, there is the potential for two phases of utilization impact, each with unique characteristics.
In this article, Milliman’s Joanne Fontana and Tom Murawski explore the potential effects of the COVID-19 pandemic on the dental industry, considering changes in utilization of dental services that could result from the pandemic and its containment efforts as well as the economic ramifications that are already starting to occur and may last for some time.
Compared with medical lines of business, dental products
typically have more predictable claim patterns, lower overall claim dollar
amounts, and much lower risks and severities of catastrophic claims. This
predictability can foster complacency in dental rate-setting. Some companies go
several years without a robust dental rating manual review or refresh.
Companies instead may choose to focus on rating manual updates for higher-risk
lines of business, and insurers may simply “trend forward” their dental rating
manuals year after year without taking a critical look at what they should change.
It’s important to periodically review dental rating
methodologies for actuarial soundness and to maintain competitive rates. If the
starting claim costs and pricing factors in a rating manual are stale, premiums
likewise will be stale and competitive positioning in the market could suffer
as a result.
In this paper, Milliman’s Tom Murawski and Sean Hilton discuss why actuarially sound rating manuals are essential to adequate and competitive pricing of dental insurance rates.
Rising drug costs present new challenges for medical stop loss (MSL) insurers. As costs increase, drugs and associated rebates present an opportunity for product innovation. This paper by Milliman’s Kevin Pierce and Thomas Murawski explores potential innovations and key strategies for MSL insurers.
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.
As the healthcare reform debate continues in Washington, D.C., it is worth revisiting one of the key components of the proposed American Health Care Act (AHCA). The Patient and State Stability Fund (PSSF) is a grant program included in AHCA intended to stabilize individual and small group state insurance markets and lower patient costs. The PSSF would appropriate a total of $100 billion to states over the period 2018 through 2026. In this paper, Milliman’s Paul Houchens, Kathleen Ely, and Thomas Murawski discuss elements of the PSSF as proposed by the American Health Care Act (AHCA) on March 6, 2017. The authors also explore the following considerations for stakeholders.
• Value of reinsurance option
• Short application window
• State-specific impact of AHCA provisions
• High-risk pools
• State-run cost-sharing subsidies
• State-run premium subsidies
• Reduced Medicaid enrollment and benefits
• PSSF grant allocation methodology
• Promotion of and payment for preventive care
• Impact to healthcare providers