Health exchange managers in Massachusetts are trying to take charge of a complicated job: Protecting health insurers against the possibility that the Patient Protection and Affordable Care Act (PPACA) could flood them with expensive enrollees.
PPACA gives each state the option of managing high-cost enrollee flood risk themselves or letting the U.S. Department of Health and Human Services (HHS) handle the job.
Analysts at the Massachusetts exchange — the Health Connector — say they could do a much better job than HHS, by using local claims data, by splitting the claims data used into more condition categories, and by reflecting the way the state’s health plans are designed.
Daniel Apicella, the Health Connector finance director, recently talked at Massachusetts’ PPACA risk-management options in a presentation prepared for an exchange board meeting.
Health Connector believe the predictive accuracy of the state’s own model is about 47 percent to 53%, and that the federal model has a predictive accuracy of just 29 percent to 36 percent, Apicella said.
Improving methods for predicting enrollees’ costs “enhances the potential for stabilization,” and a well-run stabilization program “increases cost predictability from the perspective of [the] carriers, allowing them to price more aggressively,” Apicella said.
The board voted to extend a contract with an actuarial consulting firm, Milliman, and have Milliman help it get HHS permission to run a local risk-adjustment program. For 2013, the contract has a maximum value of $1.9 million.
PPACA opponents are still trying to kill or block implementation of the law.
If the law takes effect on schedule and works as expected, it will require HHS and state governments to make exchanges, or Web-based health insurance supermarkets, available to individuals and small employers in all states and the District of Columbia.
PPACA also will create new tax subsidies for moderate-income people who want to buy commercial coverage; impose a new tax on many individuals who fail to have a minimum level of coverage; require all individual and small-group carriers to sell coverage on a guaranteed-issue basis, and put tight restrictions on carriers’ ability to use personal health information in pricing coverage.