From the SOA Health Meeting: Health actuary shares key points from session

by Sara Teppema, SOA Staff Fellow, Health


Learn more from health actuary and professor Ian Duncan about his session, “U.S. Health Reform: What U.S. Actuaries Can Learn from Experiences in Other Countries” and his thoughts about new research related to Massachusetts’ healthcare system.  Did you attend Ian’s session?  Share what you learned about health reform after hearing from Ian and other experts.

Health actuary shares key points from session

Actuary discusses Massachusetts health care reform

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2 responses to "From the SOA Health Meeting: Health actuary shares key points from session"

  • Jack Marsh says:

    I’m new to the profession and really enjoy and appreciate these reports on the conference. I’m not sure how much of a contribution I can make to an ongoing dialogue, but they do raise questions for me that I would love to see addressed.

    First, I do see the relation between mandated availability and increasing health costs. That seems to make sense. I would have imagined it was something that should be anticipated and appears to have been anticipated by the PPACA. If I understand correctly, that act does establish rate review regulations. Or at least a framework for such regulations. Did the Massachusetts plan not initially establish any sort of rating regulations? Or were they just administered poorly? Or maybe “poorly” is too judgemental a word . . . maybe the increased rates were necessary and could be justified by the Massachusetts regulations. In any case, is there a lesson the federal plan can take from Massachusetts about rate regulations? Or is it merely enough that the we learned regulations should be part of the PPACA?

    Second, I would anticipate some tension between providers and insurers on the one hand and regulators on the other. The former interested in raising costs and rates, the latter in keeping them low. Is there some framework to ease that tension? Perhaps something the SOA or other professional bodies are doing to encourage cooperation between the parties?

  • Ian Duncan says:

    Thank you for your interest and your post. You raise a wide range of issues.

    Regarding mandates and cost, it was a selling-point of both Massachusetts and National reform that adding a lot of previously uninsured people as premium payers to the pool would add more in premiums than it added in claims, leading to overall lower loss ratios. It is hard to tease out this effect from all the other changes in Massachusetts (although i am leading an SOA-sponsored study to do just that). What is incontrovertible is that costs have not been reduced on a PMPM basis and rather have gone up.

    The mission of the Connector is to provide an exchange. We have no authority over rates. Nor do we bargain with carriers over the commercially insured population because we are simply an exchange, and do not pay any premium subsidy. Plus the number of members buying through the exchange is small so our influence is small too.

    As Medicare and Medicaid show when you limit rates to below-market levels, you get access problems. I do not know how this will be handled Federally. Clearly, HHS wants to regulate ratees (as Massachusetts did subsequently by limiting rate increases).

    As someone who believes in competition and markets I dont find tension between providers and insurers unhealthy. The insertion of an artificial price cap by the state insurance department (as happened) is more problematic, as is any regulated price. There are some special market circumstances that apply in Massachusetts that make the market less than perfect, but there is no shortage of cooperation between the parties, or new ideas surfacing all the time from market participants to address issues.

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