Strategic Considerations in ACA Pricing
Rachel Killian, FSA, MAAA (Atlanta)
Andy Large, FSA, CERA, MAAA (Atlanta)
November 6, 2014
Single Risk Pool Considerations
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November 6, 2014
Single Risk Pool Considerations
 What is the standard risk pool and what is it used for?
 Who is in the single risk pool?
 How to determine what is the single risk pool?
– Today’s single risk pool?
Or
– Tomorrow’s single risk pool?
 Impact of changes made in single risk pool
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November 6, 2014
Morbidity Assumption
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November 6, 2014
Morbidity Assumption
 Million $ Question!
– What is your plan’s morbidity?
– What is the market’s morbidity?
 What are some sources of data to help identify?
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November 6, 2014
Pent-Up Demand
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November 6, 2014
Pent-Up Demand
 Largely an individual issue
 Largest impact in 2014.
 Could impact future years but at decreasing rate.
 Remember it is in the experience so may need to back it out.
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November 6, 2014
Benefit Design
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November 6, 2014
Benefit Design
 Actuarial Value
 Network
 Metal Level Strategy
 Relationships between plans
 Other Design Considerations
 What do consumers really care about?
 ACA Rules are not the only rules that must be followed!!
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November 6, 2014
Induced Utilization
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November 6, 2014
Induced Utilization
 This term implies different things to different people.
 HHS Factors
 Difficult to isolate
– Change in utilization due to difference in cost sharing
– Selection of richer plans by sicker people
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November 6, 2014
Area Factors
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November 6, 2014
Area Factors
 Competitive everywhere or only certain places.
 Balance across the single risk pool.
 Area factors shouldn’t include member morbidity differences.
 Competitor’s Area Factors
 Could offer different products by area.
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November 6, 2014
Premium Loads
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November 6, 2014
Premium Loads
 3+ Child Load, Non-Payment of Premium Load, Etc.
 CSR Silver Induced Utilization
 Metal Level Curve Strategy
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November 6, 2014
Risk Mitigation Programs (the 3Rs)
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November 6, 2014
Risk Mitigation
 Risk Adjustment
 Reinsurance
 Risk Corridors
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November 6, 2014
Regulatory Changes
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November 6, 2014
Regulatory Changes
 Prospective
 Retrospective Ongoing Impacts
 State Issues
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November 6, 2014
How To Use Experience?
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November 6, 2014
How to Use Experience?
 Deductible/MOOP Leveraging
 CSR Payments
 Credibility of Data/Subsets of Data
 Total Cost from Experience but Benefit Relationship using
Relativity Theory
 Plan Mix Assumptions
 Demographic Assumptions
 Area Distributions
 Pent-up Demand
 Experience is pre-3Rs and CSRs
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November 6, 2014
New Market Entrants
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November 6, 2014
New Market Entrants
 Discount Estimation
 Managed Care Savings
 Shadow Pricing
 What Else?
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November 6, 2014
What Moves the Needle?
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November 6, 2014
What Moves the Needle?
 Morbidity
 Discounts
 Managed Care Savings
 Benefit Design
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November 6, 2014
Why Did My Rates Change?
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November 6, 2014
Why Did My Rates Change?
 Population Morbidity
 Trend
 Transitional Reinsurance Changes
 CSR Utilization
 Catastrophic Risk
 Demographic changes
 Benefit Design/Leveraging Impact
 Admin Cost Changes
 Tobacco Assumptions
 Discount Changes
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November 6, 2014
Why Did My Rates Change?
 Managed Care Savings Changes
 Area Factor Changes
 Change in Risk Adjustment
 Change in the Experience Credibility
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November 6, 2014
SERFF and HIOS Strategy
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November 6, 2014
SERFF and HIOS Strategy
 Timing of Filing versus Deadline
 Upload Issues
 Keep up with know filing issues to avoid last minute “bad”
mistakes.
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November 6, 2014
DOI Objection Strategy
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November 6, 2014
DOI Objection Strategy
 Important to Work with DOI and not against the DOI
 Some states are focused more on rate levels rather than solvency
but opposite also true.
 Everyone including DOI is still getting used to all of the
rules/concepts of the ACA.
 Federal Review in addition to or in place of state review
 Part II – Rate Increases over 10%
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November 6, 2014
DOI Objection Strategy
 Scrutiny will increase each year
 2015 harder than 2014
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November 6, 2014
Questions?
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November 6, 2014