Controlling Indirect Selection under Healthcare Reform - Society of ...

More documents

Recommendations

Info

16 with respect to insurers and plans by making information and enrollment available via centralized, electronic health insurance exchanges (PPACA, Subtitle D). As favorable as these changes are to consumers, these changes cannot be made without other offsetting changes as they unbalance the system by removing most of the weight from the left side of the bar, leaving most of the weight on the right side: Figure 4 G. Other Changes to Balance the System Figure 4 shows that insured selection will outweigh insurer selection when insurer direct selection is removed, swinging the system toward insurer losses. In order to re-balance selection, other changes must occur. Two such changes are built into the healthcare reform legislation: 1. Requirement that everyone have health insurance – mandatory insurance (PPACA, Section 1501).
17 2. Risk adjustment (PPACA, Section 1343). 35 Mandatory insurance eliminates consumer choice with respect to seeking insurance. Removing this element of consumer choice considerably decreases insured selection. That is why the health insurance industry lobbied hard for mandatory insurance (AHIP, 2008). So called mandatory health insurance under PPACA, however, is not truly mandatory. Certain individuals are exempt from the insurance requirement (PPACA, Section 1411). Furthermore even the majority required to have insurance can opt instead to pay a tax penalty. The tax penalty is trivial in 2014 and even at full value in 2016 is a fraction of the cost of purchasing health insurance (PPACA, Section 1501). Also, tax penalties can be assessed only on those who actually file a tax return. No insurance will still be a component of the selection balance, just a smaller component. Something, therefore, is needed on the left side of the bar to offset the continued consumer choice forces associated with selecting an insurer, a plan, and whether to purchase insurance. That something is risk adjustment. Risk adjustment refers to a “process of adjusting payments to health plans or health care providers in order to reflect the health status, or illness burden, of the members” (SOA, 2009). Under healthcare reform insurers must charge everyone the same premium 36 regardless of health status. There is then a non-consumer facing risk adjustment mechanism (PPACA, Section 1343) which shifts money between insurers and from the government to insurers depending upon the health status of the insurer’s insureds. The ideal is that risk adjustment will immunize insurers from the effects of insured selection. Risk adjustment is not insurer selection, but because it offsets the effect of insured 35 In addition to Section 1343, Sections 1341 and 1342 provide for transition period (3 year) risk mitigation via reinsurance and risk corridor provisions. These provisions are transitional and this portion of the discussion is with respect to long term balance, so I have omitted them here. I will, however, discuss them later in a section relating to the likely evolution of selection efforts ( The Game). 36 Rates must be uniform except with respect to family coverage, rating area, age, and smoking status (PPACA, Section 2701). Age and smoking status rate differentials are capped.
Page 1 and 2: Controlling Indirect Selection unde
Page 3 and 4: iv ACKNOWLEDGEMENTS I am thankful f
Page 5 and 6: vi C. Regulatory Timing ...........
Page 7 and 8: viii 22. Profit = .................
Page 9 and 10: x MEPS P&C PBM PHI PPACA RA SES SOA
Page 11 and 12: I. INTRODUCTION Consultants from th
Page 13 and 14: 3 This paper is meant to be a prime
Page 15 and 16: 5 1970; Rothschild & Stiglitz, 1976
Page 17 and 18: 7 the right side of the bar. With r
Page 19 and 20: 9 limits choice for other high risk
Page 21 and 22: 11 2. Process. Direct selection is
Page 23 and 24: 13 just a department. This expansiv
Page 25: 15 F. Consumers Demand Change Direc
Page 29 and 30: 19 consumer selection. This section
Page 31 and 32: 21 Whether the adjustment occurs vi
Page 33 and 34: 23 risk. 43 Today’s risk adjustme
Page 35 and 36: 25 Figure 8 Other Predictive Variab
Page 37 and 38: 27 Genetics are also important. A d
Page 39 and 40: 29 generally socially and economica
Page 41 and 42: 31 of costs and very few have $50,0
Page 43 and 44: 33 have no recent diagnoses or pres
Page 45 and 46: 35 Unidentified Sick are unidentifi
Page 47 and 48: 37 Figure 15 Demonstration: Financi
Page 49 and 50: 39 The benefits of indirect selecti
Page 51 and 52: 41 get insurance or gets it on less
Page 53 and 54: 43 Assuming that at least some insu
Page 55 and 56: III. INDIRECT SELECTION UNDER HEALT
Page 57 and 58: 47 insurers should use a Lifestyle
Page 59 and 60: 49 Figure 19 Neighborhood-Level Dat
Page 61 and 62: 51 This list of data elements align
Page 63 and 64: 53 Consumer marketing databases pro
Page 65 and 66: 55 Figure 23 New Business Predictiv
Page 67 and 68: 57 diabetics while finding ways to
Page 69 and 70: 59 risk insureds, “skimping” wi
Page 71 and 72: 61 Figure 28 The model is consisten
Page 73 and 74: 63 Insurers will rely upon predicti
Page 75 and 76: 65 that they are related to the cha
Page 77 and 78:
67 profitable and the second neighb
Page 79 and 80:
69 relevant to insurers with a larg
Page 81 and 82:
IV. PUBLIC POLICY CHALLENGES Indire
Page 83 and 84:
73 will never be a clear line betwe
Page 85 and 86:
75 healthcare cost variance outside
Page 87 and 88:
77 to educate poor children. Althou
Page 89 and 90:
79 Figure 30 Dynamic System: The ke
Page 91 and 92:
81 regulators. If regulators don’
Page 93 and 94:
83 regulatory front, while struggli
Page 95 and 96:
85 in Chapter 3. The discussion wil
Page 97 and 98:
87 1A: Include family income in ris
Page 99 and 100:
89 example, assigning a risk premiu
Page 101 and 102:
91 2. Market Entry Regulators desig
Page 103 and 104:
93 2A: Individual insurance only fr
Page 105 and 106:
95 “restricting choices”. It is
Page 107 and 108:
97 adverse consumer selection. Whil
Page 109 and 110:
99 3B: Fixed benefit designs. It is
Page 111 and 112:
101 There is general consensus in t
Page 113 and 114:
103 4D: Agent restrictions. At a mi
Page 115 and 116:
105 Figure 35 Regulatory Options 5
Page 117 and 118:
107 6. Post-Enrollment Consumer sel
Page 119 and 120:
109 6E: Disenrollment per head pena
Page 121 and 122:
111 While insurers cannot directly
Page 123 and 124:
113 the insureds who have a diagnos
Page 125 and 126:
115 E. Monitoring If regulations ar
Page 127 and 128:
117 enrollment and disenrollment ra
Page 129 and 130:
119 publicly discussed. Discussing
Page 131 and 132:
121 Such a strategy is dependent up
Page 133 and 134:
REFERENCES AAA. (2009). Issue Brief
Page 135 and 136:
125 Byrne, S. K. (2008). Healthcare
Page 137 and 138:
127 Gallo, L. C., Penedo, F. J., Ex
Page 139 and 140:
129 Lewin Group. (2010). Individual
Page 141 and 142:
131 Riley, T. (2010). Reform has a
Page 143 and 144:
133 van Barneveld, E., van Vliet, R
Page 145 and 146:
APPENDIX Health Insurance Risk Adju
Page 147 and 148:
Appendix 137 ABSTRACT The U.S. Pati
Page 149 and 150:
Appendix 139 BACKGROUND As expresse
Page 151 and 152:
Appendix 141 not eligible for subsi
Page 153 and 154:
Appendix 143 Starting in 2011 insur
Page 155 and 156:
Appendix 145 1) Current conditions
Page 157 and 158:
Appendix 147 First consider the lin
Page 159 and 160:
Appendix 149 counter this argument.
Page 161 and 162:
Appendix 151 Current Risk Adjustmen
Page 163 and 164:
Appendix 153 Model 4 fits the risk
Page 165 and 166:
Appendix 155 An examination of the
Page 167 and 168:
Appendix 157 ANALYSIS Data Descript
Page 169 and 170:
Appendix 159 Specifically, the anal
Page 171 and 172:
Appendix 161 Equation 1 Proxy Expen
Page 173 and 174:
Appendix 163 Expenditures have been
Page 175 and 176:
Appendix 165 Equation 3 Normalized
Page 177 and 178:
Appendix 167 The technical difficul
Page 179 and 180:
Appendix 169 prediction residuals?
Page 181 and 182:
Appendix 171 The lower income and h
Page 183 and 184:
Appendix 173 RESULTS The results ar
Page 185 and 186:
Appendix 175 Figure 12 Income Effec
Page 187 and 188:
Appendix 177 LIMITATIONS The analys
Page 189 and 190:
Appendix 179 Likewise, due to healt
Page 191 and 192:
Appendix 181 DISCUSSION Even with t
Page 193 and 194:
Appendix 183 Much of Jost’s timel
Page 195 and 196:
Appendix 185 RECOMMENDATIONS Based
Page 197 and 198:
Appendix 187 TABLES
Page 199 and 200:
Appendix 189
Page 201 and 202:
Appendix 191
Page 203 and 204:
Appendix 193 REFERENCES AAA. (2010)
Page 205 and 206:
Appendix 195 Diez Roux, A. A. (2001
Page 207 and 208:
Appendix 197 McKinsey & Company. (2
Page 209 and 210:
Appendix 199 WHO. (2005). Facing th
Page 211 and 212:
TIA GOSS SAWHNEY Vita 201 Directo
Page 213 and 214:
TIA GOSS SAWHNEY Vita 203 “Busine
show all

Controlling Indirect Selection under Healthcare Reform - Society of ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?