Future of health actuaries

[Herbert Hoover]

The self-insurance market is going to boom.

They don't have to meet MLR by the way.

[FormLetter]

Originally Posted by Herbert Hoover

The self-insurance market is going to boom.

They don't have to meet MLR by the way.

Yeah it makes sense that MLR doesn't apply to self-insured situations because there is no premium for the denominator.

[The Obese Dog]

Originally Posted by FormLetter

Yeah it makes sense that MLR doesn't apply to self-insured situations because there is no premium for the denominator.

why not an admin ratio?

[Herbert Hoover]

Much of the growth in the self funded arena will likely come from small to mid sized employers exiting the PPACA altered fully insured market.

Saw this today in a listing of health trends. This topic was trend numero uno.

Large companies with more than 5,000 employees are a common feature of the self-funded health plan market. However, small and mid-size firms across the country are increasingly turning to self-insurance to reduce healthcare costs, reports CFO.com.

In fact, the percentage of employers with fewer than 1,000 plan members that self-insure has grown from 29 percent in 2008 to 48 percent in 2010, according to PricewaterhouseCoopers (PwC). "The reality is that companies with below 1,000 lives do experience more fluctuation [in cost] than [larger] ones," Michael Thompson, a principal in PwC's human-resource services group, told CFO.com. "But insurance companies don't necessarily protect them any better, because they just base their rates on their past experience."

Many employers may be getting the impression that fully insured health plans don't protect them at all. Case in point: In May, the city of Temple, Texas, received proposals for its fully insured health plan that included cost increases ranging from 46 percent to 103 percent. So this Oct. 1, Temple will transition to a self-funded health plan, with Blue Cross Blue Shield of Texas acting as the city's third-party administrator, as well as providing stop-loss insurance, according to a press release. Temple expects the self-funded approach to bring "more transparency in our utilization and costs," said City Manager David Blackburn. "There are significant costs associated with starting a self-funded plan for health insurance that have been borne by the city. In FY2010-2011, employees will typically see a 10 percent increase in their premiums depending on which of the two plan options the employee selects."

[nashno9]

Originally Posted by FormLetter

Restricting small group to 3:1 entirely changes a lot of small group markets. Underwriting at the individual level does take place in the small group market, as well as age rating up to 6:1 and beyond, and other rating factors, including predictive modeling based on claims, dx, and rx data. All of that goes away. Go ahead and call me wrong, but if you walk into my office and look at all the work my department is doing, you'll see a lot of it is going to be affected..

The law says something along the lines of you cannot charge a different premium over that ratio or based on other rating factors, but this applies to the individual's premium. You can have a high rate based on a few risky individuals in that block of business, but the premiums charged across that block have to be the same. How does this change?

Originally Posted by FormLetter

You're right, we can't prevent an individual in a small group from obtaining coverage if we offer coverage to the group. But the entire group can be denied or at least priced appropriately which is often equivalent to a denial.

So this does not change, but now, these individuals pruchase insurance through an exchange (or in 2014) so I would say this increases business.

Originally Posted by FormLetter

Eliminating underwriting means expected claims given that the individual/group obtains insurance go up. That bumps premiums up or leads to insolvency. Premiums increasing leads to fewer groups obtaining insurance, increased pressure on regulators to "do something", whether that something is price controls (insolvency hello) or the creation of a public option of some sort.

Wouldnt the easiest thing be to attack costs at a provider level since those ultimately drive the premiums? The government risk adjuster should handle this reimbursement to give plans with lots of sick individuals a high reimbursement.

I have also heard of certain large insurers reclassifying admin costs as medical expenses in an attempt to circumvent the MLR. Thoughts? obviously goes against the spirit of the MLR, but if the MLR proves to be impossible to meet will this be overlooked?

My argument is that there is no reason to panic if you are in the health insurance industry, I just see an increased role at least immediatly and depending on how somethings play out maybe beyond, but at least no worse than as is now.

[FormLetter]

Originally Posted by The Obese Dog

why not an admin ratio?

Go ahead and define it. It could be done, it just wouldn't be an MLR.

[Dr T Non-Fan]

Originally Posted by Herbert Hoover

Much of the growth in the self funded arena will likely come from small to mid sized employers exiting the PPACA altered fully insured market.

Saw this today in a listing of health trends. This topic was trend numero uno.

Interesting. Perhaps these companies will hire underwriters to check the health status of potential employees before they're hired.

[Not Mike]

Originally Posted by The Obese Dog

why not an admin ratio?

What's the point of an MLR in self-insurance? Who are you trying to protect? Loss ratios are going to be in the 95% range in a self-funded arrangement.

[Herbert Hoover]

Originally Posted by Not Mike

What's the point of an MLR in self-insurance? Who are you trying to protect? Loss ratios are going to be in the 95% range in a self-funded arrangement.

The stop loss lobby (SIIA) nearly went apoplectic over the MLR. They certainly didn't want the MLR to apply to them.

[TwoStep]

Originally Posted by nashno9

Over the past decade, health insurance profits have increased nearly 250% . . .

Where did you get this information?