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. Stan Roberts, FSA, MAAA Craig Keizur, FSA, MAAA

San Mateo County Uninsured Feasibility Analysis April 23, 2007. . Stan Roberts, FSA, MAAA Craig Keizur, FSA, MAAA . Contents. Milliman Introduction Data Sources Cost Models Claim Projections Considerations. About Milliman.

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. Stan Roberts, FSA, MAAA Craig Keizur, FSA, MAAA

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  1. San Mateo County Uninsured Feasibility Analysis April 23, 2007 . Stan Roberts, FSA, MAAA Craig Keizur, FSA, MAAA

  2. Contents • Milliman Introduction • Data Sources • Cost Models • Claim Projections • Considerations Milliman

  3. About Milliman • Premier consulting and actuarial firm serving clients in four specific practice areas since 1947 • Healthcare, Life/Financial, Pension/Employee Benefits, and Property/Casualty • More than 1,800 employees including actuaries, clinicians, technologists, and operations consultants, and local presence in 41 offices worldwide. • Milliman’s healthcare practice currently provides consulting services for over 125 health plans and 300 hospitals across the U.S. Milliman

  4. Milliman Capabilities • Actuarial Consulting • Data Warehousing • Clinical Consulting Actuarial Consulting: Commercial, Medicare, Medicaid, and Other Public and Private Payers i. Pricing and Financial Projections (Feasibility) ii. Reserve Analysis (e.g., IBNR) iii. Capitation Development and Risk Sharing Analysis iv. Rate Filing Support v. Benchmarking and Actual vs. Expected Review vi. Hospital and Provider Contract Analysis and Review Milliman

  5. Pricing Process for Health Plan of San Mateo Uninsured Program Milliman

  6. Low Income / Uninsured Considerations • Why Costs May Be Higher Than Commercial Population • Low income people are generally less healthy than higher income • Uninsurables • Pent-up demand • Adverse selection from those that elect coverage Milliman

  7. Low Income / Uninsured Considerations • Why Costs May Be Lower Than Commercial Population • Not “Benefit Aware” • May qualify for other source of coverage (Medi-Cal) • Better discounts (lower provider reimbursement) than commercial (e.g., Medicare or Medicaid levels) • Healthy opt-out Milliman

  8. Low Income / Uninsured Considerations • Other drivers of cost • Premium Requirements • Benefit Design (e.g.,cost sharing) • Demographics • Discounts • Enrollment Approach • Coordination with other Coverage Milliman

  9. Data Sources • Milliman “Health Cost Guidelines” • The HCGs are a flexible tool for modeling many different benefit plan design scenarios for multiple populations and payers. Underlying our HCG models are claim probability distributions which are statistical tools that assist in valuing deductible and member out-of-pocket maximum cost sharing. Public and proprietary data sources • Utilization per 1000 • Community Billed Charges • Internal Research • Client Data • Other State Programs • State and other Public/Private Data • Claim Probability Distributions • Client Assumptions Milliman

  10. Modeling Adjustments • Region = San Mateo County, CA • Population = Uninsured • Demographics = Varies by FPL cohort • Discounts / Reimbursement = 100% Medicare Allowable • Trends • Center Date = July 1, 2007 • Other • Adverse Selection • Administration = n/a at this time Milliman

  11. Plan Offerings • HMO-Style Plan Design • Complex Chronic vs. Healthy Individual • “Coverage” vs. “Insurance” • High Deductible • First dollar preventive covered • “Donut Hole” Milliman

  12. Plan Design Milliman

  13. Gross and Net Claim Cost Projections(July 1, 2007 Center Date) Milliman

  14. Net Claim Cost - Age Illustration(July 1, 2007 Center Date) Milliman

  15. Illustrative Monthly Premium Rates*(July 1, 2007 Center Date) * Assumes illustrative administration and profit load of 15% Milliman

  16. Considerations • “Coverage” vs. “Insurance” • Carve out benefits or members? • Benefits (no reductions reflected in pricing) • Out of area (1-2%) • Rx discounts – Depends on relationship between 340B discounts and those assumed in pricing • Members • Maternity costs already removed to account for 0-150% FPL pregnant woman coverage. Result was approximately 7% savings in 0-200% FPL CC/HI plan. • Projected claim costs reflect “moderate” plan management efforts • 30%-50% Degree of Healthcare Management • Can estimate additional savings from plan management efforts • Impact of mandate • Mitigate adverse selection • Benefit Options • Higher deductible • Benefit maximum Milliman

  17. Outstanding Issues • Confirm Pricing Assumptions • Finalize Plan Options • Benefit design • Consider Subsidies • Consider Premium Rate Structure • Age-Bands • Multi-Year Cost Projections Milliman

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