Dissues the circumstances under which price control is considered necessary.
(a) (2 points) List the data sources available for estimating medical claim costs in each category: federal government publications (ii) actuarial publications (iii) other external sources You are a health benefits actuary at a large employer. Your CEO has asked you to evaluate the following flexible option plan: Actual Plan Proposed Flexible Options Comprehensive Health Point-of-Service Major Medical Maintenance (POS) High Deductible (MCC) Organization In- Out-of- Indemnity (IDP) HMO) Network Network Relative Benefit 1.00 1.15 1.05 0.95 0.65 Value Provider Discount 1.00 0.75 0.82 1.00 1.00 Savings Utilization Savings 1.00 0.91 0.96 1.00 1.00 Trend 1.15 1.11 1.12 1.15 1.17 Selection and 1.00 0.92 1.11 0.70 Antiselection You are also given: Prior year claims per employee: $9,500 Projected network usage for POS option: o In network: 80% o Out-of-Network: 20% Projected enrollment: o HMO: 35% o POS: 60% o High Deductible Indemnity: 5% (b) (2 points) Assess the impact on the claims cost of introducing the proposed flexible plan. Show your work. (c) (/ point) Recommend whether or not the proposed Flexible Plan should be implemented. Justify your answer.(a) (2 points) Describe selection risks to the insurer for: (i) multi-choice employer group environment (ii) the individual market (b) (2 points) Describe antiselection models in the individual market. An employer offers three health plans A. B, and C to its employees. You are given: Number of Relative Monthly Employer Plan Description Employees Morbidity Premium Rate Contribution A High deductible HSA plan / 40 40% $400 $400 full network plan B Medium deductible / 35 100% $500 $400 limited network plan C Low deductible / full network plan 25 250% $600 $400 (c) (2 points) Calculate the antiselection risk. Show your work. (d) (1 point) Propose employer contribution amounts to reduce the antiselection risk. Justify your answer.(9 points) You are an actuary for an HMO investigating ways to reduce plan premiums. You are considering Tiered Network Health Plans (TNHPs) as a tool to achieve this objective. (a) (1 point) Define TNHP. (b) (/ point) Describe the process of designing a TNHP. You are given historical data for Providers A, B, C, D, and E for the most recent calendar year: A B C D E Rating Area 1 2 Total Utilization 4,800 3,600 1,200 4,800 3.600 Allowed Claims $960,000 $900,000 $240,000 | $1.200.000 $900.000 Member Months 2,400 1,800 600 2.400 1.800 You are given: Providers B. D. and E have been designated as non-preferred providers. . . 50% of members utilizing non-preferred providers will shift to utilizing a preferred provider in their rating area. Members currently pay 25% coinsurance. . . Under the proposed TNHP design, members will pay the following coinsurance: o 25% for preferred providers 40% for non-preferred providers (c) (5 points) Calculate the savings resulting from implementing the TNHP. State your assumptions. Show your work. (d) (2 points) Critique the proposed TNHP design
