aca enrollment - soa 10 28 14
TRANSCRIPT
Jason Siegel, FSA, MAAA
If We Knew Then What We Know Now: ACA Enrollment
Utilization & Morbidity
What does morbidity look like in the
in the 2014 commercial markets?
It Depends!
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
Why are we getting mixed messages?
• Varies by state and market
• Depends on what you’re comparing to
• Dependent on whether you normalize for
demographic & other variables
• Data is incomplete and decentralized
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
How did underwriting shape the pre-
ACA markets?
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
$0
$100
$200
$300
$400
$500
$195
$449
$383 $358
$190 $243
$169 $212
$198
$288 $354
$309 $338 $317
$277 $244
$294 $298
Comparison of Individual and Small Group Market 2012 Average Claim Costs
Individual CCs Small Group CCs
How did the individual markets change
in 2014?• Issuers lose ability to underwrite
• Subsidies encourage entry for broad mix if individuals
• High risk pools go away
• Transitional policy keeps healthier out of ACA pool
• 3.8M uninsured enter market comprising 57% of individual exchange
• New market is several years older & slightly more female
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
What is the impact of demographics?
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
• Claim impact ~20% bad compared to pre-ACA
• Profit margin impact 1% to 2% good or bad
compared to pre-ACA in most states
• Profitability impact can be extreme in community
rated states
Profit Margin by State Assuming 3%
Built into Rates & Pre-ACA Demog
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Ve
rmo
nt
(43
.7)
Ne
w Y
ork
(4
2.5
)
Ne
w J
ers
ey
(42
.5)
Min
ne
sota
(4
2.4
)
Mas
sach
use
tts
(38
.5)
Dis
tric
t o
f C
olu
mbi
a (3
7.0
)
Uta
h (
35
.2)
We
st V
irg
inia
(4
6.0
)
Ore
gon
(4
5.2
)
Wis
con
sin
(44
.0)
Was
hin
gto
n (
43.
9)
Ne
w M
exi
co (
43.7
)
Iow
a (4
3.6
)
Mai
ne
(43.
6)
Ark
ansa
s (4
3.5
)
Ne
w H
am
psh
ire
(43
.2)
Co
nn
ecti
cut
(43.
2)
Pen
nsy
lva
nia
(42
.9)
Mo
nta
na
(42.
8)
Ten
ne
sse
e (4
2.8
)
Illin
ois
(4
2.7
)
Oh
io (
42.
5)
Ind
ian
a (4
2.4
)
Rh
od
e Is
lan
d (
42.
4)
Mar
ylan
d (
42.4
)
Flo
rid
a (4
2.3
)
Ala
ba
ma
(42
.2)
Sou
th C
aro
lin
a (4
2.1
)
Mis
siss
ipp
i (4
2.1
)
Mic
hig
an (
42.
1)
Cal
ifo
rnia
(42
.0)
Lou
isia
na (
41.9
)
Ne
vad
a (
41.8
)
Ken
tuck
y (4
1.7
)
Mis
sou
ri (
41
.6)
Ok
laho
ma
(41
.5)
No
rth
Ca
rolin
a (4
1.4
)
Haw
aii
(41.
3)
De
law
are
(41
.3)
Ala
ska
(41
.1)
Kan
sas
(41
.0)
Ge
org
ia (
40.9
)
Sou
th D
ako
ta (
40.8
)
Wyo
min
g (4
0.7
)
Co
lora
do
(40
.4)
Texa
s (4
0.1
)
Vir
gin
ia (
40.0
)
Ne
bra
ska
(39.
4)
Idah
o (
38.
4)
No
rth
Da
kota
(3
7.5
)
Ari
zon
a (
37.5
)
Pro
fit M
arg
in
PMPM % of Prem Diamond = full community-rated
* States are ordered as follows: community-rated, compressed age-curve, then federal age curve with decreasing average age
So What Utilization are We Seeing?
• Express Scripts study shows those on exchange
60% more likely to purchase a specialty drug
• High maternity, elective surgery, ER
• Anecdotal data on catastrophic cases
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
Possible explanations for experience
• Partly explained by pent up demand and
demographics
• Were offset for CSR and Reinsurance included?
• Was pricing conservative or aggressive?
• Rx risk score studies confirms individual market
comparable to small group
• Anecdotal tests from several clients shows
similar results after normalizing experience
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
Conclusion
• Utilization / Morbidity still unknown in many markets
• Individual market appears to be tending towards small group
• Impact of demographics either big or small depending on how you look at it
• Experience will change over initial few years of ACA as market expands
• Not sure if market will stabilize, will removal of reinsurance and risk corridors result in a rate spiral
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
Appendix 1: Uninsured rate
October 28, 2014
Appendix 2: Pent Up Demand
October 28, 2014
• Experience under the Health Indiana Plan: The short-term cost challenges of expanding coverage to the uninsured, Rob Damler, FSA, MAAA
20%
40%
60%
80%
100%
120%
140%
160%
1 2 - 3 4 - 6 7 - 9
% o
f A
ve
rag
e P
MP
M
Enrollment Duration
Relative PMPM Cost By Enrollment Duration
Inpatient
Outpatie
nt
Pharmac
y
Appendix 3: Hospital Admissions
October 28, 2014
This presentation and Q&A is not intended to be an actuarial opinion or advice, nor is it intended
to be legal advice. Any statements made during the presentation and subsequent Q&A shall not
be a representation of the SOA or of Milliman or of their views or opinions, but only of those of the
presenter.
For further information contact
Jason R. Siegel, FSA, MAAA
Actuary
Milliman
+1 262.796.3414
October 28, 2014
Contact Information