Who gets coverage?

THE HEALTH INSURANCE INDUSTRY VIEWPOINT

ONLY PARENTS WITH SICK CHILDREN WILL BUY COVERAGE. SO, IT’S TOO EXPENSIVE TO COVER OKLAHOMA NEWBORNS IN THE INDIVIDUAL MARKET.

HOW MUCH ARE THEY PAYING IN CLAIMS?

MEDICAL LOSS RATIO

ARE THEY SOLVENT?RISK BASED CAPITAL RATIO

Medical Loss Ratio Total Claims Paid / Total Premiums Collected

What percentage of earned premiums are paid out in medical claims

Medical Loss Ratio If an insurance company collects $100 in

earned premiums and pays out $70 in total claims, its medical loss ratio is 70%.

$70/$100 = 70%

Medical Loss Ratio - Current Law

Oklahoma Law = 65%

Federal Law = 80% (85% for large group market)

COMPANY MEDICAL LOSS %

BLUE CROSS 73.9%COVENTRY HEALTH

67.5%

ASSURANT 65.5%AMERICAN MEDICAL

58.4%

GOLDEN RULE 45%FEDERAL LAW 80%

RISK BASED CAPITAL RATIO

A SOLVENCY TEST

THE MINIMUM AMOUNT OF CAPITAL APPROPRIATE TO PAY CLAIMS

RISK BASED CAPITAL RATIO

NUMERATOR -- NET WORTH (CAPITAL PLUS SURPLUS)

DENOMINATOR – ADJUSTED NET WORTH ADJUSTED DOWNWARD BY VARIOUS RISKS – ASSET

RISK, UNDERWRITING RISK, CREDIT RISK

RISK BASED CAPITAL RATIO

NET WORTH/ADJUSTED NET WORTH

MINIMUM LEVEL – 200%

NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS, MODEL ACT 315

COMPANY RBCRBLUE CROSS 1084%COVENTRY HEALTH

656%

ASSURANT 595%AMERICAN MEDICAL

883%

GOLDEN RULE 654%NAIC LEVEL 200%

SHOULD WE COVER BABIES IN THEIR FIRST YEAR OF

LIFE?

THE HEALTH INSURANCE INDUSTRY VIEWPOINT

ONLY PARENTS WITH SICK CHILDREN WILL BUY COVERAGE. SO, IT’S TOO EXPENSIVE TO COVER OKLAHOMANNEWBORNS IN THE INDIVIDUAL MARKET.

HOW MANY BABIES? OKLAHOMA BIRTH

55,000 COVERED BY MEDICAID (64%)

35,200 COVERED BY GROUP INS

18,900 (extrapolation from Dept. of Health)

UNINSURED OR SELF-PAY 900 NEWBORN BIRTHS

WHAT DID THESE 900 BABIES COST?

FROM DEPARTMENT OF HEALTH, THE HOSPITAL CHARGES WERE $3.5 MILLION OR ABOUT $4,000 PER DELIVERY.

HOW MUCH DOES THIS INSURANCE INDUSTRY OWE OKLAHOMANS IN PREMIUM REBATES $12 MILLION

EXISTING COVERAGE LOW-BIRTH WEIGHT BABIES

FOR BABIES WEIGHING LESS THAN 2 POUNDS, 10 OUNCES, MEDICAID PROVIDES COVERAGE REGARDLESS OF FAMILY INCOME.

UNDER FEDERAL LAW, UNINSURED BABIES WILL BE ELIGIBLE FOR LOW COST PLANS BY THE AGE OF 6 MONTHS. (OKLAHOMA HAS RECEIVED $66 MILLION IN

FEDERAL MONEY FOR THE HIGH RISK POOL)

WHO IS EXCLUDED PARENTS OF APPROXIMATELY 1,000 NEWBORNS

(NOT LOW BIRTH WEIGHT) FOR THE FIRST SIX MONTHS OF LIFE. APPROXIMATELY 5% WILL HAVE HIGH COST

DELIVERY.

WHAT WOULD IT COST TO PROVIDE COVERAGE FOR THIS POPULATION.

WHY WON’T THE INSURANCE INDUSTRY

ANSWER THIS QUESTION?

INDIVIDUAL MARKET – ACTUARIAL REVIEW

EXPECTED CLAIMS FOR OKLAHOMANS FROM BIRTH TO AGE 19

MINUS

EXPECTED CLAIMS FOR OKLAHOMANS FROM AGE 1 TO AGE 19

EQUALS

COST TO COVER OKLAHOMANS FROM BIRTH TO AGE 1

INDIVIDUAL MARKETNEWBORNS

SUPPOSE, YOU HAVE THE FOLLOWING INFORMATION:

COST TO COVER INFANTS MLR WELL BELOW FEDERAL REQUIREMENT RBCR 4-5 TIMES ABOVE REGULATORY MINIMUMS WITHOUT A WAIVER FROM FEDERAL LAW, YOU OWE

ABOUT $12 MILLION IN REBATES TO OKLAHOMA POLICY HOLDERS.

WHAT DOES IT SAY ABOUT YOUR CORPORATE CULTURE TO EXCLUDE INFANTS?

INDIVIDUAL MARKET – NEWBORNS

IF INSURANCE FIRMS ARE REQUIRED TO COVER FROM BIRTH TO AGE 1, WHAT IMPACT WOULD THIS HAVE ON THEIR MEDICAL LOSS RATIOS?

WOULD THIS GET THEM TO THE 80% REQUIREMENT?

INDIVIDUAL MARKET – NEWBORNS

IF INSURANCE FIRMS ARE REQUIRED TO COVER FROM BIRTH TO AGE 1, WHAT IMPACT WOULD THIS HAVE ON THEIR RISK BASED CAPITAL RATIOS?

WOULD THEIR SOLVENCY BE JEOPARDIZED UNDER NAIC TEST?

INDIVIDUAL MARKET – NEWBORNS

DOESN’T THE DEPARTMENT OF INSURANCE HAVE LEVERAGE THEY DID NOT USE?

USE OF BULLY PULPIT PUBLIC ADVOCACY REFUSAL TO REQUEST WAIVER FROM MLR

(THAT’S $12 MILLION CURRENTLY OWED TO OKLAHOMA POLICY HOLDERS)

IS IT RIGHT TO MAKE A DEAL THAT LEAVES OUT BABIES?

INDIVIDUAL MARKET – NEWBORNS

WE DON’T KNOW WHAT HEALTH REFORM WILL LOOK LIKE OVER THE NEXT 3 YEARS, UNTIL FEDERAL LAW IS EITHER OVERTURNED OR IMPLEMENTED?

WHY NOT COVER INFANTS FOR THIS 3 YEAR PERIOD AND JUST MONITOR THE IMPACT ON MLR AND RBCR?

INDIVIDUAL MARKETNEWBORNS

SOME INSURERS WANT TO DO THE RIGHT THING"Insurers said…[w]e'll stay in the marketplace and offer the coverage, but only if our competitors do,' …But when everybody else started pulling out, it had a domino effect.”Robert Zirkelbach, America’s Health Insurance Planshttp://insurancenewsnet.com/article.aspx?id=226607&type=newswires

INDIVIDUAL MARKETNEWBORNS

WHAT THAT MEANS

“WE’LL DO THE RIGHT THING IF YOU MAKE US.”

INDIVIDUAL MARKETNEWBORNS

SO – LET’S MAKE THEM DO THE RIGHT THING. THERE’S A SIMPLE SOLUTION THAT PROTECTS

OKLAHOMA NEWBORNS

MANDATE COVERAGE!

First, they came for the trade unionists, and I did not speak out because I was not a trade unionist.

Then they came for the Jews, and I did not speak out because I was not a Jew.

Then they came for me, and there was no one left to speak out for me.

Martin Niemoller