Tag Archives: Tom Snook

Insurers may leave federal exchange market if SCOTUS repeals subsidies

Many insurers are contemplating the financial implications that a U.S. Supreme Court ruling against federal healthcare subsidies would have on their business. This Wall Street Journal article (subscription required) quotes Milliman’s Tom Snook discussing a potential exodus from the federal exchange if tax credits are rescinded.

Here is an excerpt from the article:

Insurers offering products in the federal-exchange states are worried that they could be caught short this year. An antisubsidy ruling could potentially take effect—and prompt consumers to drop coverage—as soon as this summer. Insurers are locked into rates for 2015 and typically wouldn’t be able to raise prices midyear. And partly because of state regulations, it isn’t clear if or when insurers would be able to withdraw from the federal marketplace before January.

But for 2016, if the federal insurance tax credits are unavailable in a state, “the impact would be substantial enough that I would expect many carriers to consider pulling from the market,” says Tom Snook, an actuary with consultants Milliman Inc. who is working with a number of insurers offering exchange plans. “There’s a question, if the subsidies are struck down, if it’s an insurable market.” That could leave consumers with fewer, and far pricier, choices.

Prices determine plan selection on ACA exchanges

A recent Managed Healthcare Executive article suggests that individuals’ decisions to purchase plans on the health exchange were largely price-driven. According to the article, Milliman’s Tom Snook agrees that buyers were more price-sensitive than many anticipated.”

Managed Healthcare Executive published the graphic below showing the percentage of plans selected by tiers.

Offering less expensive plans under a “copper” tier has also been suggested, although data is needed to establish rates and learn who may benefit from such plans. In the article, Snook addresses the challenges insurers face setting rates for existing tier plans ahead of 2015:

Because of the confusion accompanying the rollout of the insurance exchanges, [insurers] have not yet yielded much insight into how accurate rate setting will be for 2015. However, this lack of data is not surprising to executives of health plans. “They knew going in that they would be flying not entirely blind but close to it for 2015,” says Snook. “Even if they know their risk profile they don’t know how they compare to the rest of marketplace.”

…“There is a sense that 2015 may be the first real year of ACA experience,” he says. However, he believes that health plans are still likely to see a lot of unexpected developments and that it will take several years for things to settle into a recognizable pattern.”

For more of Tom Snook’s perspective on healthcare reform, click here.

Insurers adjust to paradigm shift

Health insurers can no longer use health underwriting to determine who they will insure. This change has caused a shift in how insurers approach the individual market. The Wall Street Journal (subscription required) quotes Milliman’s Tom Snook providing some perspective on the paradigm shift:

Health plans need to know the health status of those signing up for coverage so they can project whether the costs are likely to outrun the premiums coming in. That information will be critical in figuring out prices for next year, among other things. But, under the law’s new rules, enrollees don’t have to disclose pre-existing conditions to buy insurance.

…”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.”

The new paradigm introduces a new question for insurers: What is the risk mix of the insurance pool? While the health exchange marketplace has reportedly seen an uptick in enrollment by younger individuals recently, age alone is not a clear indicator of an insurer’s potential risk.

Here’s what Snook told The Wall Street Journal in a recent article concerning younger enrollees:

Insurance officials also caution that age doesn’t always indicate health status–younger people may have serious, expensive conditions, while some older people rarely need medical services. Age is a “pretty good predictor,” said Tom Snook, an actuary with Milliman Inc. who works with insurers offering plans on public exchanges, but “it’s not even close to a perfect measure.”

Top 10 Milliman blogs for 2013

Milliman publishes blog content addressing complex issues with broad social importance. Our actuaries and consultants offer their perspective on healthcare, retirement plans, regulatory compliance, and more. The list below highlights Milliman’s top 10 blogs in 2013 based on total pageviews:

10. In their blog “Five keys to writing a successful qualified health plan application,” Maureen Tressel Lewis and Bonnie Benson highlight several best practices insurers should consider when submitting a qualified health plan application to the Health Insurance Marketplace.

9. “Understanding ACA’s subsidies and their effect on premiums” offers perspective into the relationship in the Patient Protection and Affordable Care Act (ACA) between healthcare premiums and federal subsidies for low-income individuals.

8. Future funding for the Consumer Operated and Oriented Plan (CO-OP) Program was eliminated as a result of the fiscal deal that was signed in December 2012. Tom Snook takes a look at how the deal affects CO-OPs in his blog “CO-OPs: An endangered species?

7. Robert Schmidt discusses why the methodology used to determine COBRA premium rates is essential in his blog “The growing importance of COBRA rate methodologies.”

6. A second blog by Maureen Tressel Lewis and Mary Schlaphoff entitled “Five critical success factors for participation in exchange markets” highlights tactics that insurers offering qualified health plans may benefit from implementing.

5. “Pension plans: Key dates and deadlines for 2013” offers Milliman’s three retirement plan calendars (defined benefit, defined contribution, and multiemployer) with key administrative dates and deadlines throughout the year.

4. In her blog “Fee leveling in DC plans: Disclosure is just the beginning,” Genny Sedgwick explains how investment expenses and revenue sharing affect the fees paid by defined contribution plan participants.

3. Maureen Tressel Lewis and Mary Schlaphoff’s blog “Five common gaps for exchange readiness” describes items issuers of qualified health plans have to resolve before their plans can be sold on the Health Insurance Marketplace.

2. In the lead-up to implementation of the ACA, debate often centered on how the law would affect healthcare premiums. Our “ACA premium rate reading list” offers perspective on how rates may be affected.

1. In his blog “Retiring early under ACA: An unexpected outcome for employers?,” Jeff Bradley discusses the impact that the ACA could have on both early retirees and plan sponsors.

This article was first published at Milliman Insight.

ACA premium rate reading list

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.

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CO-OPs: An endangered species?

For much of 2012, political arguments raged over the preservation or deconstruction of the Patient Protection and Affordable Care Act (PPACA). Despite all the noise, very little change actually occurred.

Then one day into 2013, a significant aspect of the law was quietly defunded.

As part of the Fiscal Cliff deal, all future funding for Consumer Operated and Oriented Plans (CO-OPs) has been eliminated. Entities that have already been awarded federal loans can continue to establish CO-OPs as planned, but all other entities will not have federal funding available to them. Some entities that were already underway on the planning process may be able to identify other sources of funding, but the path forward has become far more difficult, if not impassable.

As we outlined in an article published last week, CO-OPs are subject to the same fundamentals as any insurance entity, and they also face some unique challenges. And the recipe for success today is no different than it was last week. Those CO-OPs that did receive funding, however, are likely to face more scrutiny, as the whole idea of a CO-OP has become prematurely endangered.

The removal of federal funding probably eliminates the possibility that the CO-OP movement will spread. Here’s an (now obsolete but still interesting) excerpt from last week’s article:

Another factor is the question of how widely the CO-OP movement will spread, which will in large part determine the CO-OPs’ market clout. Will sufficiently large numbers of people be attracted to CO-OP membership? So far, there are some glaring gaps, particularly in the most heavily populated states; as of this writing, for example, no new CO-OPs have been approved in California, Texas, or Florida. In that sense, the CO-OPs are not fully meeting the policy goals of the enhanced marketplace.

Many will be watching the 24 CO-OPs that already received funding to see if the CO-OP model can, indeed, improve access while reducing costs, as was hoped for when the law was drafted.