Tag Archives: Tom Snook

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.

Health reform and the individual mandate

Thomas Snook

This post originally appeared on the Society of Actuaries blog.

Two prominent physicians at Johns Hopkins recently made comments supporting the individual mandate provision in the healthcare reform law. Just a few days later, the 11th Circuit U.S. Court of Appeals struck down the provision, ruling it unconstitutional. While the decision is seen by most as just a way station on the way to the Supreme Court, it does point to the sensitive nature of the provision.

As actuaries, we can’t help but see the mandate a little differently than either physicians or judges. Regardless of our political views—and if you’re wondering, mine happen to be independent, moderate, and centrist—our professional expertise tells us that in the absence of underwriting and other traditional insurance risk management provisions, something is necessary to address adverse selection. The individual mandate may offer that something—as I indicated almost two years ago in a paper co-authored with Ron Harris. Without it, the sustainability of private health insurance is at risk.

What is meant by “adverse selection”? Adverse selection is simply people acting in their own economic self-interest. Health insurance is not cheap, especially if you don’t have an employer subsidizing some or all of the cost. The purchase of health insurance is a significant financial commitment that thoughtful people will weigh carefully in light of other economic needs. (Many commentators, including the Hopkins physicians, refer to those going without health insurance as “free riders”; I find this phrase to be unfortunate, as it is simplistic and pejorative without recognizing the economic realities that families face in making this decision).

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Aiming at accountability

With the proposed accountable care organization (ACO) regulations issued yesterday, it’s all eyes on ACOs. This video captures the cost challenge and explores how ACOs may offer a solution.


We have a large library of ACO materials–you’ll find them here. Highlights include papers and posts about:

Check back soon for more on ACOs and the new regulations.

Exchanges: The nexus of health reform

The fourth installment in our “strategic considerations” series (see #1, #2, #3) looks at state health insurance exchanges.

The state exchanges mandated by the PPACA are not required to be in effect until 2014, but states are planning for them now and insurers need to consider how to position themselves with respect to the exchanges. States have a wide-ranging authority to set the conditions of the exchanges, and there are many questions to be answered in each case, for example:

  • What level of product and essential benefits will be required by an exchange?
  • Will there be separate exchanges for individuals and small groups, or will they be combined in one pool?
  • What kinds of market forces may be created by exchanges that influence carriers operating outside the exchange?
  • Which states’ exchanges will have a cost-control mechanism, and which will not?1
  • Will there be interstate exchanges?
  • The political atmosphere within some states is strongly opposed to the healthcare reforms. Will those states try to avoid developing an exchange, or establish an exchange so weak that it cannot function effectively?

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