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Merged Market Analyses

Merged Market Analyses. Table of Contents. Market Segments Premium Setting What does it mean to merge markets? Market Comparisons Merged Market Scenarios Enrollment Projections Merged Market Results Conclusions All analysis shown was done prior to PL90. Market Segments.

joan-blackburn
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Merged Market Analyses

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  1. Merged Market Analyses Gorman Actuarial, LLC

  2. Table of Contents • Market Segments • Premium Setting • What does it mean to merge markets? • Market Comparisons • Merged Market Scenarios • Enrollment Projections • Merged Market Results • Conclusions • All analysis shown was done prior to PL90 Gorman Actuarial, LLC

  3. Market Segments • Insurance carriers define market segments to assist them with managing their business • Sales & Marketing • Enrollment & Billing • Products & Premiums • Federal and State government define market segments to assist with regulation • Maine Individual Market – People who purchase insurance on their own which will include sole proprietors; Rating is regulated • Maine Small Group Market – Employer groups that have up to 50 employees; Rating is regulated • Maine Large Group Market – Employer groups that have more than 50 employees; Rating is not regulated • Large Group (51 to 100) Gorman Actuarial, LLC

  4. Premium Setting • Due to current Maine regulations, insurers set premiums separately for each market segment • Premiums are developed by analyzing data • Demographics • Health Status • Use of Medical Services • Individual Market • Guaranteed Issue states, where health underwriting not allowed, average premiums are generally higher and the population generally is older and tend to use more medical services than other markets • States where health underwriting is allowed, average premiums are generally lower and the population is typically younger and healthier than other markets- however the premiums for the older and less healthy in these markets may be extremely high Gorman Actuarial, LLC

  5. What does it mean to merge markets? • Premiums are based on the combined populations of the merged markets • If market segments are not homogenous • One market segment subsidize the other • Premiums increase for one segment • The healthier and younger segment • This segment provides the subsidy • Premiums decrease for the other segment • The sicker and older segment • This segment will receive the subsidy • One set of regulations will apply to the merged market – this will also cause disruption Gorman Actuarial, LLC

  6. Maine Market Comparison Gorman Actuarial, LLC

  7. Maine Market Comparison Gorman Actuarial, LLC

  8. Market Comparison Gorman Actuarial, LLC

  9. Merged Market Scenarios Merged Market 1 Individual Market Small Group Market • Results will change based on when the merging occurs • After CY 2014, markets will look different due to premium tax subsidies, Individual Market will be larger • Federal Health Reform allows states to merge these markets, it is not mandatory Merged Market 2 Large Group 51 to 100 Market Small Group Market • Federal Health Reform requires this merging to take place in CY 2016 • States have the option to merge prior to CY 2016 Gorman Actuarial, LLC

  10. Maine Enrollment Current & Projected • Membership projections modeled by Dr. Gruber • Modeling done prior to the passing of PL90 • Individual Market grows considerably due to Federal Health Reform (FHR): • Individual Mandate and Premium Tax Subsidies • Uninsured drop by 60K • Small Group Market shrinks a little • Groups drop coverage due to premium increases due to FHR; may be exacerbated by PL90 • Large Group 51 to 100 - assumed flat growth Gorman Actuarial, LLC

  11. Maine Individual + Small GroupMerged Markets • Premium change due to merging Individual & Small Group Markets • Individual Market premiums decrease: 9% to 15% • Small Group Market premiums increase: 7% to 12% • Results independent of medical trends • Modeling does not reflect PL90 * Note that the modeling does not reflect the federal transition reinsurance program Gorman Actuarial, LLC

  12. Maine Small Group + Large Group (51 to 100) • Premium change due to merging Small Group Market & Large Group (51 to 100) • Small Group Market premiums decrease up to 1% • Large Group (51 to 100) Market premiums increase up to 5% • Results independent of medical trends • Modeling does not reflect PL90 * Note that the modeling does not reflect the federal transition reinsurance program Gorman Actuarial, LLC

  13. Large Group (51 to 100) Market • In CY 2016, Large Group (51-100) Market will be merged with Small Group Market • Large Group Rating Formula will move from partial experience rating to community rating • There will be “winners and losers” from this change • Groups that tend to be lower utilizers of medical care may experience premium increases • Groups that tend to be higher utilizers of medical may experience premium decreases • Difficult to model – every carrier’s rating formula in this market is different Gorman Actuarial, LLC 08/23/2011

  14. Conclusions • Due to Federal Health Reform Uninsured drop by 60,000 and Individual Market grows • Merging Individual Market with Small Group: • Individual Market: Premiums decrease 9% to 15% • Small Group Market: Premiums increase 7% to 12% • Small Groups may drop coverage or move to self insured • Merging Small Group with Large Group (51 to 100) • Small Group Market premiums decrease up to 1% • Large Group (51 to 100) Market premiums increase up to 5% • While premiums changes are minimal on average, the Large Group (51 to 100) Market will experience premiums disruptions due to rating formula changes Gorman Actuarial, LLC 08/23/2011

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