Discuss the cost push theory.
Whay is the demand pull theory.
(7 points) You are the health pricing actuary for Buy My Insurance, Inc., a private organization based in New York. You are considering offering a new individual plan that will be available on the New York State Health Benefit Exchange (HBE). In doing so, you are considering how the Affordable Care Act (ACA) impacts the pricing of your individual plan. (a) (/ point) Describe the pricing risks and the implications of these risks when considering offering an individual plan on the exchange. (b) (4 points) List and explain ACA provisions established to mitigate pricing risks that Buy My Insurance is facing with this new product. (c) (2 points) Outline key elements required in the actuarial rate filing memorandum based on ASOP 8.(4 points) The State of Euphoria convenes a work group to improve care for their senior citizens in the state, particularly those whose economic circumstances have made them dually eligible, by creating an integrated program. (a) (1 point) (i) List social determinants which negatively affect health. (ii) Describe how the two primary determinants affect the target population. (b) (/ point) List dual eligible benefits and identify which are paid by Medicare or by Medicaid. (c) (1 point) (i) Explain how acute care services delivered to dual eligibles in a non- integrated program result in limited cost savings. (ii) Describe how this affects the care delivered to the beneficiary. (d) (/ point) Describe why the state of Euphoria might not want to switch to an integrated approach.(6 points) New Albanian Health Insurance Company (NAHIC) wants to grow membership in its U.S. disability portfolio: Noncancellable renewable individual disability insurance Guaranteed renewable group long term disability (LTD) insurance . Optionally renewable group short term disability (STD) insurance (a) (2 points) Describe how renewability impacts each of these policies. (b) (4 points) Describe the applicability, under FAS 60, of the following items for each of New Albanian's disability products: Accrued experience refunds Active life reserves DAC reserves Maintenance expense reserves Premium deficiency reserves Unearned premium reserves . Unpaid claims adjustment expenseSuppose the USD money market interest rate curve is currently 6% per annum for all maturities. Consider an interest rate futures contract expiring in 5 years with an underlying term of 3 months (a "60-63 future"), and a forward rate agreement (FRA) of the game expiry date and term (a "60-63 FRA"). (2) Show that the value (variation margin) of USD 1 billion nominal of 60-63 futures, transacted when interest rates were 7%, is $2,500,000. You may ignore initial margin. (b) Show that the value of USD 1 billion 60-63 FRA, transacted when mterest rates were 7%, is $1,868,145. [3] Suppose the following combined trade was undertaken: Sell USD 10 billion 60-63 future: @ 93.00 Sell USD 13.40 billion 60-63 FRA @ 7% (Note: A sold FRA benefits if interest rates decline.)(2) Give reasons why the combined trade might have been undertaken. (b) Explain the relative sizes of the two "legs". (9) Calculate the profit or loss for two different scenarios, when the interest rate curve changes instantaneously from 6% to 4%, and from 6% to 8%. (d) Compare the two results in (c). [6] Two random variables s and s, follow the Wiener Processes: with E[=] = p. (mii) (2) Derive the process followed by the product =152- (Note: The generalised Ito's formula for n processes of the form dx, =pdr + ods, is: df dx + d'f dt where f'is a function of the x, and z, and p is the correlation between { and s;) (b) Describe how you would use this result to calculate an estimate for the (risk neutral) expected price differential between the contracts traded in (ji), stating any further information you would require [71
