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Life Health > Health Insurance > Health Insurance

SOA Speakers Bring the Numbers

By Allison Bell

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Actuaries are converging on Boston this week to explain to one another, in precise, carefully checked mathematical terms, just what is going on with the U.S. health care system.

The Society of Actuaries (SOA), Schaumburg, Ill., has attracted about 900 attendees to the latest annual SOA Health Meeting with sessions about topics such as the causes for recent increases in medical costs, the reasons for the big difference in health care spending levels in the United States and in comparable countries, and how actuaries now involved in health insurance underwriting will make a living if the Patient Protection and Affordable Care Act of 2010 (PPACA) succeeds at eliminating individual and small group medical underwriting.

In Boston, comics are known for “bringing the funny.” The SOA meeting presenters have brought the data, and the SOA has presented written versions of many of the presentations on its website, at http://www.soa.org.

Edward McEllin entertained attendees at the international health care experience session with a true story about Kim Beazley, Australia’s new ambassador to the United States. When Beazley slipped on the ice and hurt his knees, his care cost about $35,000, or 4 times as much as it would have cost in Australia, according to Australian press reports.

Even the actuaries had difficulty pinpointing just why U.S. health care is so much more expensive than care in the rest of the world. National macroeconomic drivers include inflation, economic growth, advances in technology and changes in health care supply, according to John Cookson, who spoke at a medical drivers session.

Cookson gave the cost of the capital that health care providers and other players in the system need to operate and grow as another, somewhat less obvious driver.

Tom Handley, another speaker at the medical trends session, noted that private health insurers are picking up about 34% of the U.S. health care tab, which is similar to the share of health care expenditures they handled in 1985. Consumers only pay 13% of the bills out of pocket, down from 23% in 1985.

Government programs pay 43% of the bills, up from 33% in 1985.

Despite the increase in the government’s share of health care expenditures, the United States is still below average when compared with other wealthy countries in terms of the government’s share of overall health care costs, and it’s close to the median in terms of consumers’ out-of-pocket spending on health care, Handley said.

U.S. residents are about one-third less likely than residents of comparable countries to smoke but almost twice as likely to be obese. The United States has fewer hospitals and fewer physicians per 1,000 residets than the other countries, but overall health care expenditures may be higher partly because U.S. residents get far more CAT scans, MRIs and angioplasties.

Researchers at the World Health Organization (WHO), for example, have ranked the U.S. health care system 37th in the world. That ranking system included factors such as mortality rates, equality of health care distribution, equality of access to services, and equality in terms of payment for health care, but it left out factors such as quality, outcomes and patient satisfactions, McEllin said.

During the session on health insurance, speakers suggested that actuaries might shift from assessing health insurance applicants to determining which health plan enrollees need extra care management and coordination services to hold down their health care costs.

At another session, Adam Southcott, an underwriter at a nonprofit health plan in New York — a state that already forbids medical underwriting in the individual and small group market — reported that health insurers in New York still have underwriters and actuaries. Underwriters and actuaries there focus more on product design, pricing and analysis of current enrollees rather than underwriting applicants, Southcott said.

Other SOA coverage from National Underwriter Life & Health:

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