Sunday, March 23, 2014
AFFORDABLE CARE ACT AND RISK ANALYSIS, OR WHAT WILL MY PREMIUM BE IN 2015?
ACA and Risk Analysis
Health Insurance companies may be at great risk participating in ObamaCare. Some large insurers have taken a ‘wait and see” attitude.
Setting insurance policy premiums can be challenging.Obamacare has already set a limit on administrative expenses and the amount that must be spent on patient care by insurers.
ESTIMATING RISK FACTORS:
Obamacare and Health benefit exchanges add another set of unknowns. The ACA stipulates that pre-existing illness cannot be a reason for denial of insurance. This eliminates any means of estimating risks in the newly insured. Statistically speaking young persons spend less on healthcare, which is why health benefit exchanges must sign up many young people who do not consume healthcare vs. older patients who consume much more.
There is no real experience on risk pools in the ACA. Perhaps there may be some estimation by looking at previous risk pool analysis in each demographic. However the availability of insurance to previously uninsured could produce an entire new set of figures. So, despite not being able to use pre-existing conditions as a parameter for insurance, insurers such as Blue Cross and Blue Shield of North Carolina is asking enrollees to fill out health risk assesments by offering free gift cards to those who fill out the survey. In addition they are encouraging screening tests, and initial primary care visits for evaluation. It is hoped this will accelerate the rate setting process.
Insurers are not confident in forecasting premium rates for 2015. Even if statistics from January 1, 2014 until mid 2014 are utilized it is still a very short time period for newly insured to obtain health care. Many uninsured can be expected to seek out health care for neglected and longstanding chronic conditions. Utilization figures could be biased by this initial demand for health services.
Most statisticians would most likely prefer a 24-36 month period to determine risks.