Archive of 2012 January

27Jan2012
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SOA Blog
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Risk
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Risk management links for the week of January 23

Each Friday we provide links to the best online articles and conversations about risk management. If you would like to add to this list, just leave a summary and a link in the comments section. Enjoy the links for the week of January 23, 2012. As determined through hundreds of interviews with global business leaders and experts, income inequality tops the World Economic Forum’s annual list of likely global risks for 2012. Others risks topping the list include bad government balance sheets, greenhouse gas emissions, cyber attacks and water shortages. Erwann Michel-Kerjan, managing director of Wharton’s Risk Management and Decision Processes Center and report co-author, says these risks are not low-probability events and are pretty likely to happen. (Source: US News & World Report) (more…)

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23Jan2012
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Risk
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The many sides of retention Thumbnail

The many sides of retention

In economics, there is a saying: “If you lined up all the economists end to end, they still couldn't reach a conclusion.” While the field of enterprise risk management (ERM) is not laden with as many philosophically divergent views as economics, those responsible for reducing risk at organizations certainly do not think homogeneously. With that in mind, stay tuned for a series of posts that offer up common scenarios faced by management teams and how to view those issues through the lens of people in different occupations. Through these posts, we hope you will gain a better understanding of the general thought processes and backgrounds that professionals from different walks of life bring to solving the complex problems related to risk mitigation. For the first post in this series, we chose to look at the all too common problem of employees leaving an organization en masse. Let’s consider the hypothetical situation of an advertising firm experiencing employee retention issues due to a series of leadership changes and, consequentially, low morale among those who felt loyalty to the former management regime. In addition, the firm recently decided to cut back its contributions to employee retirement plans because of continuing effects of a down economy on its bottom line. In exit interviews, employees frequently cite both of these events as reasons for leaving. (more…)

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19Jan2012
On the edge of a new age of healthcare financing Thumbnail

On the edge of a new age of healthcare financing

by Ian Duncan, University of California - Santa Barbara When I entered health actuarial work 31 years ago, the absolute cost of health benefits was much lower (although as a percentage of average nominal income the difference is less than is sometimes recognized).  Plans reimbursed allowable expenses for eligible members without much interference. Insurers employed claims payers and actuaries; medical directors were involved in underwriting, if at all. All that has changed with managed care.  The managed care revolution was successful in its early days (zero and even negative trends for HMOs in the mid-1990s) but consumers revolted against the limited choice and trend began its rise.  At the same time there was an explosion of new, life-extending devices and drugs which added to cost. I think we have learned a few things along the way, including the fact that providing consumers with insurance increases consumption (hardly surprising but overlooked in the scramble for reform). We stand on the edge of a new age of healthcare financing, in which the old insurance model is effectively outlawed (no longer can we underwrite, exclude pre-existing conditions or charge a rate appropriate for the risk). I don’t believe that this model will be any more successful than prior models at containing costs, and will lead inexorably to a complete government run system. The latest Kaiser Family Foundation poll finds that 41% of Americans favor repeal of the ACA; the latest Rasmussen poll finds the split of likely voters between those who favor and those opposed to repeal at 54%-39%.  So it appears as though, despite rising costs, the American people reject the ACA as a so

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17Jan2012
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Inside the SOA
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Apps for Actuaries makes its debut Thumbnail

Apps for Actuaries makes its debut

by Tim Deitz, manager MG-ALFA client services, Milliman Inc. I got an iPhone about a year ago and found it to be a tremendous source of utility and entertainment. There are so many apps available I still really haven’t figured out where to start. A visit to the App Store can be overwhelming unless I am searching for a specific app that was recommended by someone I know. Everybody has a game to recommend, but finding useful business-related apps is more difficult. I’ll take a chance on the free ones, but once I have to spend money, I want to talk to someone who has actually used it and would recommend it. This is why I am very excited about the launch of the Society of Actuaries “Apps for Actuaries” site. Instead of self-promoting advertisements, I hope to find useful apps that my fellow actuaries are using and would recommend. I expect that Apps for Actuaries will help guide us through the maze of apps that are available. I also hope that the existence of the site will encourage developers to design apps specific to this market. If you are an active app user, I encourage you to contribute to the site by submitting recommendations and rating/liking the apps in the guide to benefit your fellow actuaries. (I’ve already shared my recommendations.) We need your input to help the guide grow and evolve. Right now there are about 50 apps listed, but we’d like to see this list grow to 150-200 apps. And if you’re not that familiar with the many apps available to you, Apps for Actuaries is a great starting point—especially if you just received a new iPad or smartphone over the holidays. I hope you will use this guide regularly to help Apps for Actuaries

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17Jan2012
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Retirement
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January—A Big Month for Retirement Planning Issues Thumbnail

January—A Big Month for Retirement Planning Issues

by Joe Tomlinson, Tomlinson Financial Planning LLC The year starts on a busy note for the Society of Actuaries Committee on Retirement Needs and Risks with the launch of a major initiative, which involves the production of 11 Decision Briefs on important decisions that individuals need to make around the time of retirement. Each of the briefs deals with a specific decision area and offers key considerations to help individuals plan for retirement. As Anna Rappaport, who chairs the CRPNR, notes, "The time around retirement is particularly challenging, not only because of the life changes, but also because of the number of decisions that must be dealt with." The committee felt that it could provide useful information for both individuals contemplating retirement, and for professionals, like accountants, lawyers, and investment advisors, who work with such individuals. Anna adds, "We recognized that individual decisions depend on unique personal characteristics, but we felt that we could offer useful general information." To produce the Decision Briefs, the committee utilized a workgroup consisting of actuaries and other professionals. Included in the workgroup were members who were close to retirement age themselves, who could bring both personal and professional insights to the project. The briefs are focused on the issues facing average Americans and they do not deal specifically with issues that are only important to high-income individuals. All 11 Decision Briefs are available on the SOA website. These are the topics covered by the briefs: (more…)

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10Jan2012
Pioneer ACOs:  The experiment begins Thumbnail

Pioneer ACOs: The experiment begins

by Bob Tate, consulting actuary On Dec. 19, 2011 the CMS Innovation Center announced that 32 organizations have been selected to participate in their Pioneer ACO Model starting in 2012. Pioneer ACOs aim to deliver more coordinated and therefore better and more efficient care to Medicare Fee-For-Service (FFS) beneficiaries. If the ACOs can keep the Medicare FFS costs for their assigned populations below targets, while meeting standards for quality improvement, they can receive bonuses of up to 70% of the Medicare savings. It will be an interesting experiment. These organizations are effectively agreeing to reduce their revenues by X, with the opportunity to get 70% of X back. They must reduce their costs by more than the net revenue reduction (30% of X) to break even financially, and they must figure out how to pay for any investments to start the ACO. If they don’t meet their savings targets (trend lower than national Medicare FFS trend minus 1%, roughly), they get no bonus, and even have to pay back some losses to Medicare if their costs are too high. (more…)

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06Jan2012
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Risk
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Risk management links for the week of January 2

Happy New Year to all those who have devoted themselves to managing risks inherent in running a business, dealing with health issues or making an investment. Here are the best links for the week of Monday January 2, 2012. Based on recent data from the Bureau of Vital Statistics, Mayor Bloomberg announced last week that New Yorkers’ life expectancy is higher than the national rate, attributing this to anti-smoking and ant -obesity campaigns, increasing taxes on cigarettes and calorie-count requirements for fast food restaurants. (more…)

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05Jan2012
Essential health benefits – How will they be defined? Thumbnail

Essential health benefits – How will they be defined?

by Dan Pribe, consulting actuary, Optuminsight Imagine you’re a committee member for your state’s Medicaid program.  Your committee must decide the Essential Health Benefit (EHB) package provided to Medicaid beneficiaries while keeping within the budget your state legislature has provided.  Through some rather contentious meetings, you’ve all agreed to a package which includes most medications and services, but excludes some very expensive ones such as Elaprase, a medication costing nearly $400,000 per year to cover Hunter’s Syndrome, an extremely rare metabolic disorder affecting about 500 people in the United States.  Now imagine you come home from work a few weeks later and in some weird twist of fate your spouse informs you that your child has been diagnosed with Hunter’s syndrome.  You realize that if you had been on Medicaid, you’d be out of luck. While this particular situation is highly unlikely, it does draw our attention to how the EHB package required under the Patient Protection and Affordable Care Act (ACA) will be determined.  (more…)

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