Bottom
line…There will be a huge increase in premiums for those of us that pay for our
own Health Insurance. Where do I come up with a 26%, or 32%, or a 60% increase
in my insurance premium. Patients that do not have insurance do not see the
doctor. Obamacare will be a mess, and why should I be filed into some second
rate Government sponsored health plan…I deserve better as an American, a
Veteran, and a tax payer! We all do!
But health law supporters are pushing back, noting close ties
between the actuaries making the forecasts and an insurance industry that has
been complaining about taxes.
By Jay Hancock, Kaiser Health News Staff Writer
THURSDAY, April 18, 2013 (Kaiser Health News)
— Few aspects of the
Affordable Care Act are more critical to its success than affordability, but in
recent weeks experts have predicted costs for some health plans could soar next
year.
Now health law supporters are pushing back,
noting close ties between the actuaries making the forecasts and an insurance
industry that has been complaining about taxes and other factors it says will lead to
rate shock for consumers.
"Most actuaries in this country -- what
percentage are employed by insurance companies?" Sen. Al Franken, a
Minnesota Democrat, asked an actuary last week at a hearing of the Committee on
Health, Education, Labor and Pensions.
The committee was discussing a study published
last month by the Society of Actuaries (SOA) predicting that,
thanks to sicker patients joining the coverage pool, medical claims per member
will rise 32 percent in the individual plans expected to
dominate the ACA exchanges next year. In some states costs will rise as much as
80 percent, the report said.
The witness was unable to answer Franken's
question, but the senator made his point. Insurance is why actuaries exist. The
industry and the profession are hard to separate.
Using predictive math, actuaries try to make
sure insurers of all kinds don’t run out of money to pay claims. Many actuaries
also work for consultants whose clients include insurance companies.
Undisclosed in the SOA report was the fact
that about half the people who oversaw it work for the health insurance
industry that is warning about
rate shock. The chairman of society committee supervising the
project was Kenny Kan, chief actuary at Maryland-based CareFirst BlueCross
BlueShield.
Others on the committee work for firms with
insurer clients. The report included committee members’ names but not their
affiliations.
The SOA "portray themselves as this
nonpartisan think tank when in fact everything about the study is by people who
have a vested interest in the outcome of the study," said Birny Birnbaum,
executive director of the Center for Economic Justice, a Texas group that
advocates on behalf of financial and utility consumers.
To perform the research, the society hired
Optum, sister company of UnitedHealthcare, the country’s biggest private health
insurer.
Society spokeswoman Kim McKeown said the
project was overseen by credentialed actuaries "from a cross-section of
industry organizations" and was "exposed for review and comment to
the broad health care actuarial community."
Even supporters of the health act worry about
premium increases next year, when many of its provisions take effect. But the
debate fits into a larger discussion about actuaries’ public role. Actuaries
are self-regulated, which some say makes them unaccountable.
Their associations set conduct standards and
investigate malpractice in confidential proceedings. During the previous two
decades the Actuarial Board for Counseling and Discipline, which works with the
Society of Actuaries, has recommended public disciplinary measures for fewer
than two people a year, according to its annual
report.
Yet actuaries play many public roles. By
calculating the adequacy of employer pension contributions they affect the
retirement of millions. And they’ll act as virtual referees for important
aspects of implementing the health act.
"I have a great deal of respect for
actuaries," said Timothy Jost, a law professor at Washington and Lee
University and health law expert. "But I do think they often end up in …
situations where the interests of the public and of their employers might be in
conflict."
While the Obama administration has developed a calculator
plans must use for determining whether insurance plans meet the health act’s
standards for benefits and value, recently finalized
regulations give insurer-employed actuaries the power to
override it by substituting one benefit for another.
Insurance company actuaries calculate rates
when plans file with states, which act as the industry’s primary regulators.
Charged with making sure the prices are justified, state insurance departments
often have far less actuarial expertise at their disposal than the insurers.
The Vermont Department of Financial regulation
"does not have actuaries on staff," a spokeswoman said. "We
outsource our review of rate filings."
The situation in 2011 was the same in a dozen
other states, according to information compiled by the National Association of
Insurance Commissioners.
Health-act supporters complained that that the
actuary society's study predicting a 32 percent increase in claims didn't
account for key factors, including the potential for competition to lower
prices, the subsidies people will receive to buy the coverage and the fact that
next year’s plans will be more generous than this year's.
Often actuaries' predictions are not
significantly better than, say, those of the Weather Channel. Recent premium
increases of 50 percent and higher for nursing home insurance reflect a
previous under-calculation of costs by actuaries. Actuarial models didn't work
especially well at calculating subprime mortgage risk a few years ago, either.
A settlement in
New York last month revealed cases in which actuaries
overestimated liabilities and a mortgage insurer paid out as little as 20
percent of collected premiums in claims.
Jost and Birnbaum want representatives of
consumers and state insurance departments to be included on the actuaries’
discipline board. In proceedings at the insurance commissioners’ group,
consumer advocates also want the board to state that actuaries'
first duty is to the public whenever they furnish calculations
to state or federal regulators and to tighten conflict-of-interest standards
for firms producing work relied on by both insurers and regulators.
"There is always room for improvement in everything,"
said Karen Terry, an actuary for State Farm and the vice president of
professionalism at the American Academy of Actuaries, an umbrella group that
works with the discipline board and groups such as the SOA that represent
professional subspecialties such as health or pension actuaries. "We're
open to that dialogue."
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