ACA- If We Knew Then What We Know Now

From the SOA Sessions- The Evolution of Affordable Care

by P.E. Kelley

Third in a series of reports from the Society of Actuaries Annul Conference in Orlando, FL., October 26 – 29, 2014.

Orlando FL. – The Society of Actuaries annual meeting and exhibit in Orlando, Florida kicked into high gear Tuesday, the second day of general sessions. The annual event, titled Together We Progress, presented attendees with a full itinerary. There were nine different departments warming things up with introductory breakfast gatherings and preliminary idea-sharing, including a focus on ‘the actuary of the future,’ as well as ideas on education and research, financial reporting and marketing & distribution, to name only a few. Tuesday also featured the Presidential Luncheon.

Streaming Live: SOA Annual Meeting Oct 26- 29 2014- Together We Progress

The general sessions included more in-depth analysis of some of the Society’s front-burner initiatives, including:

• Professionsal Challenges for the Future
• ACA Implementation and STrategy
• FASB/IASB Developments
• Understanding ‘Smart Beta’
• Stress testing and economic capital
• Predictive Modelling

ACA: If we knew then what we know now

Enrolled
With so much of the public discussions surrounding ACA tilted in either direction along the political spectrum, since it launch in 2013, the absence of rancor during this presentation was notable, and the presenters had only to try to keep the audience engaged, having just heard her well-informed keynote speech during lunch.

Thus, the panel for this session, ACA: If we knew then what we knew now, not surprisingly focused heavily on the numbers, which, while somewhat dense at times, are telling. The presenters were Adrian Kryszak, FSA, MAAA; Gregory G. Fann, FSA, MAAA & Jason Siegel, FSA, MAAA.

The rhetorical question throughout the presentation was ‘how many people actually enrolled?’ While the Congressional Budget Office (CBO) originally projected a 7 million enrollment, it very early on amended that number down, to 6 million, given that the program stumbled out of the gate in 2013 due to technical and operational issues.

The reported enrollment, however, was actually higher, 8 million, and then adjusted down to 7.3 million, comprised of those who actually paid their premiums and remain enrolled. This, he suggested, might actually be adjusted down further.

Kryszak identified a number of reasons for this, which included some negative drivers: technical issues, bad publicity and the fact that people don’t always act rationally. But he also pointed out some positive drivers: there was no Medicaid expansion, no employer penalty in 2014 and, significantly, 2014 premiums were lower than expected.

What we know
Siegel summed this up somewhat tongue in cheek: it depends (although he was specifically referring to morbidity estimates). But there are elements of the program that are beginning to give it shape. The ‘moving parts’ appear to be functioning: open enrollment period; greater carrier participation; unisex/compressed age rate structure; provider networks and premium subsidies.

Conversely, he identified some unknowns: reinsurance corridor change; Medicaid expansion is not in all states (and there is a larger, lower-income individual market than expected); the basic health plan option is delayed until 2015 to name a few.

The biggest question mark, however, surrounds the ‘grandmother’ provision, which provides ‘vitriol for pre-ACA policies that did not meet EHB/AV criteria,’ according to Fann. This, it is feared, puts ‘insurance companies back in charge of our health care,’ while ‘playing politics with people’s lives.’

As for the individual markets in 2014, there have been changes:

• Issuers lose ability to underwrite
• Subsidies encourage entry for broad mix of individuals
• Transitional policy keeps healthier people out of ACA pool
• 3.8 million uninsured enter market, comprising 57% of individual exchange
• New market is several years older and slightly more female