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NH Insurance DepartmentNH Research and Evaluation Group October 21, 2013Tyler BrannenHealth Policy Analyst
New Hampshire Insurance Department
Health Policy Resources
• NH Comprehensive Health Information System (NHCHIS)• Detailed claims data
• NH Supplemental Report - annual• Rate review filings• Special data requests (annual hearing report)• National survey data• Other financial filings
2
NH’s Health Commercial Insurance Markets• About 55% of “insured” people covered by self-
funded employers• 76% of people covered by large employers
• Of those people, 29% are regulated as insured (140,000)
• 24% of people in small employers or individual market
• 110,000 small employer members• 40,000 individual members
3
- 50,000 100,000 150,000 200,000 250,000 300,000
Anthem
CIGNA
Harvard Pilgrim
Aetna
MVP
Usable
Assurant
HealthMarkets
United
NovaSys_Health
Celtic
American Republic
Golden Rule
Health Insurance Carrier/TPAMember Distribution by Funding
Fully-Insured Members Self-Insured Members
4
Provider Discounts – What are they?
• Health care providers develop charges for medical services• Charges may be extremely specific or by procedure
• Medication, surgical supplies, laboratory services • Incisions, excisions, endoscopies
• Health insurance companies and health care providers negotiate payment rates• Payment rates may be based on a discount from
charges, procedure, or an alternative reimbursement method, such as per diems or per case
• Patient cost sharing is dependent on the negotiated rate 5
The significance of discounts…• Two carriers have similar insured
populations, the same premiums, and a ninety percent loss ratios, but: • Carrier RED obtains an average
provider discount equal to 31 percent
• Carrier GREEN obtains a 34 percent discount
• Result = the administrative cost portion of the premium would need to be forty percent less for carrier RED to be competitive with GREEN
6
Provider Discounts and Market Share for PPO Products in New Hampshire
Aetna All Other Insurance
Anthem - NH CIGNA Harvard Pilgrim HC
MVP NH Health Plan
0%
5%
10%
15%
20%
25%
30%
35%
40%
Portion of Total PPO Patient ChargesAverage Discount
Source: NHCHIS CY2011
7
Population Health Status
• Population health status has a dramatic impact on health insurance premiums• The reason for age/gender or
population based risk adjustment• Health status is influenced by many
factors, including: environment, genetics, diet, demographics, educational background, access to medical care, and behaviors
• Health status is correlated with socioeconomic status 8
Example of differing risk scores
Company MarketMember
Distribution Risk Score Average Age Gender Bias
Aetna
Employers with 51-99 Employees
1.3% 0.75 35.7 0.53
Anthem - NH 39.0% 0.98 35.1 0.50
CIGNA 0.8% 1.13 38.6 0.39
Harvard Pilgrim HC 33.9% 1.02 34.1 0.51
MVP 24.2% 0.81 34.4 0.48
UnitedHealthcare 0.7% 0.79 33.9 0.43
Health Insurance Premiums
• Recent Trends• 2011 increase = 4%
• 2011 benefit reduction = 5%• 2010 increase = 3%
• 2010 benefit reduction = 10%
10
Medical Costs Drive Premiums
• Medical cost trend includes price, utilization, and service mix changes
• Overall 2011 trend equal to 3%• Down from 9-11% in 2009
• Utilization decrease of 2% in 2010 and 2011
• Payments to providers increased 5% in 2010 and 2011
11
Hospital Cost-Shifting in 2009(Aggregate of 26 NH Acute Care Hospital Only)
0%
50%
100%
150%
200%
250%
Percent of Gross Charges
Pa
ym
en
t a
s P
erc
en
t o
f C
os
t
3rd Party Payers (insurance)44%
Medicare40%
Medicaid8%
bad debt & charity
5%
Total amount cost-shifted: $531 million Net operating gain: $216 million (Post-Tax)Operating margin: 5.6%
other3%
The Costs of NH’s Health Care System: Hospital Prices, Market Structure, and Cost-Shifting (NHCPPS, March 2012)
Mix of Payers Across Hospitals
Analysis of Price Variations in New Hampshire Hospitals, UMMS, April 2012
What About Cost Shifting ?• Research commissioned by the Department did not show
an association between Medicaid patient volume and higher commercially insured rates at particular hospitals
• Lower outpatient commercial prices were associated with a higher percent of:• Medicaid inpatient days• Medicaid inpatient discharges
• Higher inpatient commercial prices were associated with:• Occupancy rate• Hospital cost per commercial discharge • Medicare percent of inpatient charges• Casemix index for commercial discharges and for all discharges
14
2009 Data for NH Hospitals
WMH
WDH
VRHUCV
STJ
SNH
SMH
POR
PMCNLHMON
MHMMEM
LRG
LIT
HUG
FRH
FMH
EXE
ELL
COTCON
CMC
CHE
AVH
APD
R2 = 0.1539
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
$0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000
Cost Shift per Private Payer
Cos
t Ind
ex fr
om D
OI
The Costs of NH’s Health Care System: Hospital Prices, Market Structure, and Cost-Shifting (NHCPPS, March 2012)
UMMS - There was a statistically significant positive correlation between occupancy rates and inpatient commercial prices per CMAD
Analysis of Price Variations in New Hampshire Hospitals, UMMS, April 2012
What’s New in 2014?• Individual mandate• New rules for individual and small group market
• Essential health benefits• New rating factors for calculating premiums• Metal levels
• “The Marketplace” and SHOP Exchange• Subsidies for individuals • Employer coverage in 2014 and after
18
Impact of Aging on Per Member Health Care Costs
0-4 5-9 10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70+$0
$100
$200
$300
$400
$500
$600
$700
$800
2009 Male and Female PMPM Spending by Age Group
Female Male
Member Age
PM
PM
Impact of Aging on Total Spending
0-4 5-9 10-14
15-19
20-24
25-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70+$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2009 Male and Female Total Spending by Age Group
Female MaleMember Age
To
tal S
pe
nd
(X
$1
,00
0,0
00
)
Modeling Changes to Premiums
1.0 3.0
27.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Individual Market State High Risk Pool PCIP
Axis
Title
Morbidity of Individual Market vs High Risk Pool
2014 Individual Market Premium Impact
Less than -20% -20% to -10% -10% to 0% 0% to 10% 10% to 20% 20% to 30% 30% +
-80
-60
-40
-20
0
20
40
60
80
Average Premium ChangePercent of Policies
CY 2014 Individual Market Premium Changes by Premium Change Cohort after Subsidies.
Questions?
25