NH Insurance DepartmentNH Research and Evaluation Group October 21, 2013Tyler BrannenHealth Policy Analyst

New Hampshire Insurance Department

Health Policy Resources

• NH Comprehensive Health Information System (NHCHIS)• Detailed claims data

• NH Supplemental Report - annual• Rate review filings• Special data requests (annual hearing report)• National survey data• Other financial filings

2

NH’s Health Commercial Insurance Markets• About 55% of “insured” people covered by self-

funded employers• 76% of people covered by large employers

• Of those people, 29% are regulated as insured (140,000)

• 24% of people in small employers or individual market

• 110,000 small employer members• 40,000 individual members

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- 50,000 100,000 150,000 200,000 250,000 300,000

Anthem

CIGNA

Harvard Pilgrim

Aetna

MVP

Usable

Assurant

HealthMarkets

United

NovaSys_Health

Celtic

American Republic

Golden Rule

Health Insurance Carrier/TPAMember Distribution by Funding

Fully-Insured Members Self-Insured Members

4

Provider Discounts – What are they?

• Health care providers develop charges for medical services• Charges may be extremely specific or by procedure

• Medication, surgical supplies, laboratory services • Incisions, excisions, endoscopies

• Health insurance companies and health care providers negotiate payment rates• Payment rates may be based on a discount from

charges, procedure, or an alternative reimbursement method, such as per diems or per case

• Patient cost sharing is dependent on the negotiated rate

5

The significance of discounts…• Two carriers have similar insured

populations, the same premiums, and a ninety percent loss ratios, but: • Carrier RED obtains an average

provider discount equal to 31 percent

• Carrier GREEN obtains a 34 percent discount

• Result = the administrative cost portion of the premium would need to be forty percent less for carrier RED to be competitive with GREEN

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Provider Discounts and Market Share for PPO Products in New Hampshire

Aetna All Other Insurance

Anthem - NH CIGNA Harvard Pilgrim HC

MVP NH Health Plan

0%

5%

10%

15%

20%

25%

30%

35%

40%

Portion of Total PPO Patient ChargesAverage Discount

Source: NHCHIS CY2011

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Population Health Status

• Population health status has a dramatic impact on health insurance premiums• The reason for age/gender or

population based risk adjustment• Health status is influenced by many

factors, including: environment, genetics, diet, demographics, educational background, access to medical care, and behaviors

• Health status is correlated with socioeconomic status 8

Example of differing risk scores

Company MarketMember

Distribution Risk Score Average Age Gender Bias

Aetna

Employers with 51-99 Employees

1.3% 0.75 35.7 0.53

Anthem - NH 39.0% 0.98 35.1 0.50

CIGNA 0.8% 1.13 38.6 0.39

Harvard Pilgrim HC 33.9% 1.02 34.1 0.51

MVP 24.2% 0.81 34.4 0.48

UnitedHealthcare 0.7% 0.79 33.9 0.43

Health Insurance Premiums

• Recent Trends• 2011 increase = 4%

• 2011 benefit reduction = 5%• 2010 increase = 3%

• 2010 benefit reduction = 10%

10

Medical Costs Drive Premiums

• Medical cost trend includes price, utilization, and service mix changes

• Overall 2011 trend equal to 3%• Down from 9-11% in 2009

• Utilization decrease of 2% in 2010 and 2011

• Payments to providers increased 5% in 2010 and 2011

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Hospital Cost-Shifting in 2009(Aggregate of 26 NH Acute Care Hospital Only)

0%

50%

100%

150%

200%

250%

Percent of Gross Charges

Paym

ent a

s Pe

rcen

t of C

ost

3rd Party Payers (insurance)44%

Medicare40%

Medicaid8%

bad debt & charity

5%

Total amount cost-shifted: $531 million Net operating gain: $216 million (Post-Tax)Operating margin: 5.6%

other3%

The Costs of NH’s Health Care System: Hospital Prices, Market Structure, and Cost-Shifting (NHCPPS, March 2012)

Mix of Payers Across Hospitals

Analysis of Price Variations in New Hampshire Hospitals, UMMS, April 2012

What About Cost Shifting ?• Research commissioned by the Department did not show

an association between Medicaid patient volume and higher commercially insured rates at particular hospitals

• Lower outpatient commercial prices were associated with a higher percent of:• Medicaid inpatient days• Medicaid inpatient discharges

• Higher inpatient commercial prices were associated with:• Occupancy rate• Hospital cost per commercial discharge • Medicare percent of inpatient charges• Casemix index for commercial discharges and for all discharges

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2009 Data for NH Hospitals

WMH

WDHVRH

UCV

STJ

SNHSMH

POR

PMC NLHMON

MHMMEM

LRG

LIT

HUG

FRH

FMH

EXE

ELL

COTCON

CMC

CHE

AVH

APD

R2 = 0.1539

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000

Cost Shift per Private Payer

Cos

t Ind

ex fr

om D

OI

The Costs of NH’s Health Care System: Hospital Prices, Market Structure, and Cost-Shifting (NHCPPS, March 2012)

UMMS - There was a statistically significant positive correlation between occupancy rates and inpatient commercial prices per CMAD

Analysis of Price Variations in New Hampshire Hospitals, UMMS, April 2012

What’s New in 2014?• Individual mandate• New rules for individual and small group market

• Essential health benefits• New rating factors for calculating premiums• Metal levels

• “The Marketplace” and SHOP Exchange• Subsidies for individuals • Employer coverage in 2014 and after

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Impact of Aging on Per Member Health Care Costs

0-4 5-9 10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70+$0

$100

$200

$300

$400

$500

$600

$700

$800

2009 Male and Female PMPM Spending by Age Group

Female MaleMember Age

PMPM

Impact of Aging on Total Spending

0-4 5-9 10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

65-69

70+$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2009 Male and Female Total Spending by Age Group

Female MaleMember Age

Tota

l Spe

nd (X

$1,

000,

000)

Modeling Changes to Premiums

1.0 3.0

27.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Individual Market State High Risk Pool PCIP

Axis

Title

Morbidity of Individual Market vs High Risk Pool

2014 Individual Market Premium Impact

Less than -20% -20% to -10% -10% to 0% 0% to 10% 10% to 20% 20% to 30% 30% +

-80

-60

-40

-20

0

20

40

60

80

Average Premium ChangePercent of Policies

CY 2014 Individual Market Premium Changes by Premium Change Cohort after Subsidies.

Questions?

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