Eco 430.
Senior management is proposing to double the Comprehensive premiums. (c) (4 points) (i) Calculate the new ACL RBC Ratio for XYZ Health Insurance Company assuming the Comprehensive premium doubles with no other changes. Show your work. (ii) Explain the ramifications of the new ACL RBC Ratio for XYZ Health Insurance Company. (iii) Recommend changes to senior management to adjust the ACL RBC Ratio. Justify your response. (a) (1 point) Compare and contrast Medicare Advantage and Traditional Medicare from the perspective of the member in these areas: Plan provisions Provider selection Medical Cost Management (b) (2 points) (i) State the goal of Medicare risk adjustment. (ii) Describe the impact of Medicare risk adjustment on Medicare Advantage Organizations (MAOs). (c) (2 points) Describe considerations, according to ASOP 12, for establishing risk classes for a financial or personal security system. A Medicare Advantage Plan has three members in the base year used for pricing: Member Age and Gender Status Months in Plan Base Period Diagnoses 72 Male Community, Diabetes without A non-dual, aged 12 complications and multiple sclerosis Two different diabetes diagnoses (without B 72 Female Community, 12 non-dual, aged complications and neuropathy) and multiple sclerosis Non-Medicaid, C 65 Male Not Originally 6 None Disabled You are given the following additional information: Age/Gender Risk Factors Gender Age New to Community Group Medicare Members Male 65-69 0.5 0.3 Male 70-74 0.6 0.5 Female 65-69 0.6 0.4 Female 70-74 0.7 0.6 Disease Related Risk Adjustment Disease HCC HCC Factors Diabetes without complications HCC 19 0.1 Diabetes with acute complications HCC 17 0.3 Multiple sclerosis HCC 77 0.4 Base year is 2019 and bid (pricing) year is 2021. Annualized risk score trend is 1.4%. Annualized population change factor is 0.5%. The adjustment for the CMS normalization factor is 1/1.01. . The CMS MA Coding Adjustment from the base year to the bid year is 0.98. (d) (4 points) (i) (3 points) Calculate the 2019 average Part C population risk score. Show your work. (ii) (/ point) Calculate the 2021 average Part C population risk score. Show your work.What could a central bank do to interest rates to counteract a recession? The government, rather than private business, provides flood control because those who do not pay for it still receive the benefits. This is known as an example of what? (a) (2 points) (i) Describe four non-life insurance risks. (ii) Explain how incidence and intensity affect non-life insurance premium and reserve calculations differently than life insurance. (b ) (1 point) Describe factors affecting the Margin for Additional Risk in an Internal Capital Model. (c) (2 points) Describe stages in designing an Economic Capital Model. A new business line has increased the total capital requirement. The Chief Enterprise Risk Management Officer believes the fairest approach for allocating the new capital requirement is to leave the capital requirement the same for the existing lines of business and allocate the increase to the new business line. (d) (3 points) (i) Critique the recommendation. Justify your response. (ii) Compare and contrast alternative approaches that could be taken to allocate the new capital requirement to each line of business. (iii) Recommend an approach for allocating the new capital requirement. Justify your response. (7 points) You are an actuary working for XYZ Health Insurance Company with an Authorized Control Level (ACL) Risk Based Capital (RBC) Ratio of 300%. You are given the following information. Products Premiums Loss Ratio Underwriting Risk Factor Comprehensive $100 million 85% 9% Medicare Supplement $60 million 80% 7% Dental $40 million 75% 8% (a) (1 point) Describe the components of the ACL RBC formula. (b) (2 points) (i) Describe the "back of the envelope" method to estimate the ACL RBC. (ii) Calculate the ACL RBC for XYZ Health Insurance Company using the "back of the envelope" method. Show your work
