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10May2012
ACOs and Gainsharing: What was old is new again
by Jim Toole, managing director, life & health, FTI Consulting Accountable Care Organizations (ACOs) bring hospitals and physicians together as a risk bearing entity, aligning incentives betwee
Read MoreLeave a Comment20Apr2012
Actuaries: Turn wellness from a dream into a real business advantage
by Andrew Sykes, Health at Work Wellness Actuaries Hardly a day goes by without another report of the possible and positive returns on investment available from wellness programs. Yet, with few exc
Read MoreView Comments (1)11Apr2012
Fiscal Effects of the Affordable Care Act
by Ian Duncan, University of California - Santa Barbara An important new paper by Charles Blahous of George Mason University (and a Social Security and Medicare Trustee) has just been published.
Read MoreLeave a Comment27Mar2012
Actuarial principles at play in Supreme Court health care case
by Sara Teppema, SOA senior staff fellow, practice research On Tuesday of this week, the U.S. Supreme Court wrapped up the second of four sets of arguments in the historic case involving the 2010
Read MoreView Comments (6)07Mar2012
Have provider networks and network discounts outlived their value?
by Shiraz Jetha, FSA, CERA, MAAA Provider networks originally started as a way to control patient steerage to network providers in return for price discounts. In other words, lower price for antici
Read MoreView Comments (1)06Mar2012
Latest national healthcare expenditures
by Ian Duncan, University of California - Santa Barbara The recent release of National Healthcare Expenditure data for 2010 shows a very slight uptick. What is more interesting, though, is the lo
Read MoreView Comments (2)22Feb2012
Accountable care organizations: Extending the techniques nationwide
by Greger Vigen, FSA Given rising health costs and continuing uneven quality, major players in the health care industry (hospitals, physician groups, insurance companies and professionals like actu
Read MoreLeave a Comment01Feb2012
Health care costs
by Jim Toole, managing director, life & health, FTI Consulting According to the Office of the Actuary, U.S. health spending grew more slowly in 2009 and 2010 than at any time since Medicare was signed into law. Driven by the recession, Americans delayed hospital care, avoided emergency room visits, and changed the way they purchased prescription drugs, reducing the growth in health spending close to the rate of the economy overall. Despite this, health insurance premiums grew faster than insurance spending, and the overall margins that insurers enjoyed increased. Some insurers were charging higher rates to address the uncertainty posed by the PPACA, but in general the costs associated with the changes in law have yet to materialize. Health benefit plan costs rose at rates higher than the rate of spending, squeezing margins and reducing the competitiveness of U.S. businesses internationally. Businesses responded by pushing more costs to employees, reducing overall benefits and switching to higher deductible plans with lower premiums. (more...)
Read MoreLeave a Comment19Jan2012
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 in
Read MoreView Comments (3)10Jan2012
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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