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

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vii FIGURE LIST OF FIGURES PAGE 1. Consumer Choice with No Compensatory Insurer Selection ....................................................... 6 2. Pre-Healthcare Reform Individual Health Insurance Market Balanced Selection – Incomplete Model ........................................................................................................................................ 8 3. Pre-Healthcare Reform Individual Health Insurance Market Balanced Selection – Complete Model ......................................................................................................................................... 9 4. Healthcare Reform Individual Health Insurance Market: What the Public Requested ............... 16 5. Post-Healthcare Reform Individual Health Insurance Market: The Compromise – As Ideally Envisioned ............................................................................................................................... 18 6. Today’s Risk Adjustment Variables ............................................................................................ 21 7. Other Predictive Variables: Public Health ................................................................................ 23 8. Other Predictive Variables: More ............................................................................................. 25 9. Other Predictive Variables: Final List ....................................................................................... 27 10. Demonstration: Starting Population ........................................................................................ 31 11. Demonstration: Healthy and Unhealthy People ....................................................................... 32 12. Demonstration: Further Differentiation of Healthy People ...................................................... 33 13. Demonstration: Financial Impact of Selecting on the Unidentified Risk .................................... 34 14. Demonstration: Differentiation of the Unhealthy by Severity .................................................. 36 15. Demonstration: Financial Impact of Selecting on a Few Truly Ill ............................................... 37 16. To Indirectly Select or Not: One Insurer’s Decision Framework ................................................ 38 17. One Insurer’s Decision to Select ............................................................................................... 42 18. Post-Healthcare Reform Individual Health Insurance Market: With Indirect Selection – If it Balances ................................................................................................................................... 43 19. Neighborhood-Level Data Available from EASI ......................................................................... 49 20. Individual/Family-Level Data Available from infoUSA.com ........................................................ 50 21. Consumer Marketing Databases Provide Missing Information .................................................. 53
viii 22. Profit = ..................................................................................................................................... 54 23. New Business Predictive Modeling Recipe ................................................................................ 55 24. Omitted Information Available for Retention Modeling ............................................................ 56 25. Retention Predictive Modeling Recipe ...................................................................................... 57 26. Touch Points for Indirect Selection: Initial Model .................................................................... 59 27. Touch Points for Indirect Selection: Expanded ......................................................................... 60 28. Touch Points for Indirect Selection: Full Model ........................................................................ 61 29. Indirect Selection Strategies Require ........................................................................................ 62 30. A Dynamic System for Controlling Indirect Selection ................................................................ 79 31. Regulatory Options: Risk adjustment ....................................................................................... 86 32. Regulatory Options: Market entry ........................................................................................... 92 33. Regulatory Options: Plan design .............................................................................................. 98 34. Regulatory Options: Marketing .............................................................................................. 102 35. Regulatory Options: Enrollment ............................................................................................ 105 36. Regulatory Options: Post-Enrollment .................................................................................... 108 37. Regulatory Options: Case management .................................................................................. 110 38. Regulatory Options: Providers ................................................................................................ 113 39. Regulatory Monitoring to Assess Presence and Impact of Indirect Selection ........................... 115
Page 1 and 2: Controlling Indirect Selection unde
Page 3 and 4: iv ACKNOWLEDGEMENTS I am thankful f
Page 5: vi C. Regulatory Timing ...........
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 and 26: 15 F. Consumers Demand Change Direc
Page 27 and 28: 17 2. Risk adjustment (PPACA, Secti
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
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47 insurers should use a Lifestyle
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49 Figure 19 Neighborhood-Level Dat
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51 This list of data elements align
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53 Consumer marketing databases pro
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55 Figure 23 New Business Predictiv
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57 diabetics while finding ways to
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59 risk insureds, “skimping” wi
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61 Figure 28 The model is consisten
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63 Insurers will rely upon predicti
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65 that they are related to the cha
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67 profitable and the second neighb
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69 relevant to insurers with a larg
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IV. PUBLIC POLICY CHALLENGES Indire
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73 will never be a clear line betwe
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75 healthcare cost variance outside
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77 to educate poor children. Althou
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79 Figure 30 Dynamic System: The ke
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81 regulators. If regulators don’
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83 regulatory front, while struggli
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85 in Chapter 3. The discussion wil
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87 1A: Include family income in ris
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89 example, assigning a risk premiu
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91 2. Market Entry Regulators desig
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93 2A: Individual insurance only fr
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95 “restricting choices”. It is
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97 adverse consumer selection. Whil
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99 3B: Fixed benefit designs. It is
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101 There is general consensus in t
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103 4D: Agent restrictions. At a mi
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105 Figure 35 Regulatory Options 5
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107 6. Post-Enrollment Consumer sel
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109 6E: Disenrollment per head pena
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111 While insurers cannot directly
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113 the insureds who have a diagnos
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115 E. Monitoring If regulations ar
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117 enrollment and disenrollment ra
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119 publicly discussed. Discussing
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121 Such a strategy is dependent up
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REFERENCES AAA. (2009). Issue Brief
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125 Byrne, S. K. (2008). Healthcare
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127 Gallo, L. C., Penedo, F. J., Ex
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129 Lewin Group. (2010). Individual
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131 Riley, T. (2010). Reform has a
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133 van Barneveld, E., van Vliet, R
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APPENDIX Health Insurance Risk Adju
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Appendix 137 ABSTRACT The U.S. Pati
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Appendix 139 BACKGROUND As expresse
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Appendix 141 not eligible for subsi
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Appendix 143 Starting in 2011 insur
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Appendix 145 1) Current conditions
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Appendix 147 First consider the lin
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Appendix 149 counter this argument.
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Appendix 151 Current Risk Adjustmen
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Appendix 153 Model 4 fits the risk
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Appendix 155 An examination of the
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Appendix 157 ANALYSIS Data Descript
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Appendix 159 Specifically, the anal
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Appendix 161 Equation 1 Proxy Expen
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Appendix 163 Expenditures have been
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Appendix 165 Equation 3 Normalized
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Appendix 167 The technical difficul
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Appendix 169 prediction residuals?
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Appendix 171 The lower income and h
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Appendix 173 RESULTS The results ar
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Appendix 175 Figure 12 Income Effec
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Appendix 177 LIMITATIONS The analys
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Appendix 179 Likewise, due to healt
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Appendix 181 DISCUSSION Even with t
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Appendix 183 Much of Jost’s timel
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Appendix 185 RECOMMENDATIONS Based
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Appendix 187 TABLES
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Appendix 189
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Appendix 191
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Appendix 193 REFERENCES AAA. (2010)
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Appendix 195 Diez Roux, A. A. (2001
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Appendix 197 McKinsey & Company. (2
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Appendix 199 WHO. (2005). Facing th
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TIA GOSS SAWHNEY Vita 201 Directo
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TIA GOSS SAWHNEY Vita 203 “Busine
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