The Health Conversation

How Can Health Benefit Programs Affect Health Equity?

Applying actuarial expertise and perspective to the challenge

The American Academy Of Actuaries has released a new brief: Health Equity from an Actuarial Perspective. Read the study here.

WASHINGTON—The American Academy of Actuaries is providing an actuarial perspective and actuarial expertise on health equity issues via its new Health Equity Work Group, which introduced its efforts to reduce health disparities and improve health equity with today’s release of a discussion brief, Health Equity from an Actuarial Perspective: Questions to Explore.

“There’s a far-ranging national conversation about health equity going on, and the Academy’s Health Equity Work Group is a vehicle for bringing the significant expertise and experience that health actuaries have to that conversation,” said Annette James, chairperson of the work group. “This foundational document on health equity issues begins by offering questions and topics for further exploration to help identify ways in which health benefit programs might affect health equity.”

The discussion brief frames the questions the Health Equity Work Group is exploring in the following four areas: health insurance benefit design; provider contracting and network development; premium pricing; and managing population health.

Excerpts From The Health Equity Brief

Questions To Explore

Actuaries are adding their voices to the national conversation on health equity. The American Academy of Actuaries Health Practice Council has formed the Health Equity Work Group, whose goal is to contribute to efforts to reduce health disparities and improve health equity. The work group will examine health actuarial practices and methods to assess the extent to which they may affect health disparities and recommend changes when appropriate, educate actuaries and other stakeholders on health equity issues, and apply an equity lens to the Academy’s health policy work.

This discussion brief acts as a framework to introduce the first phase of the work group’s work—identifying areas in which health actuaries are involved that may affect health equity, and developing a list of questions and topics to explore further. While through its exploration and analysis the work group may find that some actuarial methods and practices help mitigate health disparities, it may find that others —no matter how well-intentioned —could be perpetuating long-standing health inequities and inadvertently leading to poor health outcomes and an inefficient use of health care dollars. In general, actuaries focus primarily on identifying and managing financial risk.

The questions below help broaden the scope of the work group’s considerations to include non-financial outcomes, such as health outcomes and health disparities, when considering the effects of actuarial practices. By sharing information on the work group’s process, including on these initial questions and the efforts to start to answer them, the aim is to initiate a more focused health equity dialogue from an actuarial perspective, and deepen the understanding of this complex issue, which could eventually lead to effective solutions.

Health Insurance Benefit Design

There’s a far-ranging national conversation about health equity going on, and the Academy’s Health Equity Work Group is a vehicle for bringing the significant expertise and experience that health actuaries have to that conversation...

In what ways can benefit designs, formularies, or cost-sharing structures contribute to health disparities, and in what ways can they mitigate disparities?

  • How is plan design used to attract and maintain health plan members? Does the inclusion or exclusion of particular benefits, services, or prescription drugs mitigate or exacerbate disparities?
  • Can plan design features that aim to control utilization and spending affect health disparities?
  • Does benefit coverage standardization, such as essential health benefit requirements, or a lack thereof mitigate or exacerbate disparities?
  • Are there barriers to individuals choosing the plan that best fits their needs, and if so, do those barriers contribute to health inequities?
  • Does benefit design exacerbate or mitigate inequities in availability and accessibility of certain provider specialties, technologies, or treatments that may differ across geography or population?

Premium Pricing

In what ways can the methods of pricing plan benefits, developing premiums, and paying plans contribute to health disparities related to access to coverage, coverage affordability, and health outcomes? In what ways can they help mitigate disparities?

  • Does the use of historical experience data and traditional methods for trending data forward to project future spending reflect true health care needs of underserved populations? What are the implications for premiums and plan incentives to better meet the health needs of underserved populations?
  • Can actuarial methods of pricing benefits foster inequity? How are offsetting cost reductions considered when rating additional benefits? Does using a one-year time frame limit the ability to consider longer-term cost reductions?
  • Can the methods used to develop geographic rating factors and other rating factors (e.g., industry factors) affect health disparities?
  • How does risk pooling affect cross-subsidization and the impacts of pricing on disadvantaged populations?
  • How do risk adjustment program methodologies, in conjunction with risk pooling, affect plan payments for disadvantaged populations, and thereby plan incentives to enroll these populations? How might access to coverage and care be affected?

The ongoing work of the Health Equity Work Group, part of the Academy’s Health Practice Council, will include examining health actuarial practices and methods to assess the extent to which they may affect health disparities and recommend changes when appropriate, educating actuaries and other stakeholders on health equity issues, and applying an equity lens to the Academy’s health policy work.

 

 

 

About the American Academy of Actuaries
The American Academy of Actuaries is a 19,500-member professional association whose mission is to serve the public and the U.S. actuarial profession. For more than 50 years, the Academy has assisted public policymakers on all levels by providing leadership, objective expertise, and actuarial advice on risk and financial security issues. The Academy also sets qualification, practice, and professionalism standards for actuaries in the United States.

 

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