Explore how the Affordable Care Act and creation of state level and national exchanges has impacted member risk profiles and demand for small-group and individual health plans.

1. Population Risk Scores and Plan Design
RISE California Summit
July 20, 2015
Richard Lieberman
Chief Data Scientist (aka “Mad Scientist”)

2. Today’s Agenda
• I will discuss product design in
the context of:
• Transitional policy
• Small-group vs. individual market
demand
• The role of the shared
responsibility payment
• What kind of people enrolled in
Marketplace coverage in 2014
• Where to focus product design
efforts

3. Overarching Theme
• The people who have enrolled
in small-group and individual
insurance products are only a
fraction of those who will
ultimately enroll in the years
ahead
• It is too early to draw
definitive conclusions about
the risk profile of members
• Product design will need to
remain fluid

4. We Know the ACA is Increasing Coverage
Access

5. ACA Creates Winners and Losers
• It is impossible to move from a system in
which people with preexisting conditions
can be denied health coverage or charged
much higher premiums to a system where
people pay the same premium regardless
of their health without some who have
previously benefited having to pay more
• Some of the winners might perceive
themselves as losers
• Prior reforms of the US health care system
typically created only winners
• Medicare beneficiaries are uniformly better
off than they would be without coverage

6. What Happens When Politics Drives Public
Policy!

7. Is Transitional Policy a Little Train Wreck?
• The Administration gave states the
option of letting insurers continue
individual and small group plans that
would otherwise have been cancelled
in 2014, because they did not comply
with ACA standards, until October 1,
2017
• Thirty-five states are allowing issuers
to continue transitional plans for one
or more years
• 21 states are allowing issuers extend
these plans through 2017

8. Or a Big Train Wreck?
• “Millions of small businesses
nationwide — and an estimated 70% of
California's small firms that offer
employee health insurance — haven't
yet faced all the sweeping changes that
resulted from the ACA”
• Colorado has about 190,000 people in
transitional plans- 75,000 with
individual coverage and about 115,000
people in small group plans
• There are only 140,327 enrolled in
individual market plans
Sources: http://www.latimes.com/business/la-fi-healthcare-watch-
20150413-story.html and
http://www.lifehealthpro.com/2015/03/13/colorado-firm-on-
ppaca-compliance

9. Individual Mandate Penalties Increase Over
Time….

10. Mandate Penalties Are Still A Suggestion!
27-Year Old Individual
Percent of Federal Poverty Level
2015 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $325 $469 $704 $938 $1,173
Lowest Cost Subsidized Bronze
Annual Premium $0 $860 $2,162 $2,162 $2,162
Difference ($325) $391 $1,458 $1,224 $989
Percent of Federal Poverty Level
2016 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $695 $695 $875 $1,167 $1,459
Lowest Cost Subsidized Bronze
Annual Premium $0 $946 $2,378 $2,378 $2,378
Difference ($695) ($1,641) $1,503 $1,211 $919
Source of 2015 Results: “Individual Mandate Penalty May be Too
Low to Attract Middle-Income Individuals to Enroll in Exchanges”
Avalere Health, April 24, 2015 (www.avalere.com)

11. Even for Older People…Penalties Are
Minimal
50-Year Old Individual
Percent of Federal Poverty Level
2015 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $325 $469 $704 $938 $1,173
Lowest Cost Subsidized Bronze
Annual Premium $0 $424 $2,291 $3,407 $3,684
Difference ($325) ($45) $1,587 $2,469 $2,511
Percent of Federal Poverty Level
2016 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $695 $695 $875 $1,167 $1,459
Lowest Cost Subsidized Bronze
Annual Premium $0 $466 $2,520 $3,748 $4,052
Difference ($695) ($1,161) $1,645 $2,581 $2,594
Source of 2015 Results: “Individual Mandate Penalty May be Too
Low to Attract Middle-Income Individuals to Enroll in Exchanges”
Avalere Health, April 24, 2015 (www.avalere.com)

12. Are Sicker-than-Average People Enrolling?
• Researchers used Express Scripts data to compare 1
million Marketplace enrollees to a comparison group of
members with employer-sponsored insurance (ESI)
• There were marked differences in age and medication use
between early Marketplace enrollees versus those who
enrolled later
• Marketplace enrollees had both lower overall drug
spending and medication use than did the comparison
group with employer sponsored coverage and lower use of
most of the medication classes
• Marketplace enrollees had nearly four times higher odds of
using HIV medications than the comparison group. Out-of-
pocket expenses for specialty medicines were 36 percent
higher among Marketplace enrollees than in the
comparison group as well

13. Monthly Prescriptions Filled, By Month Of Enrollment In
The Marketplace And The Employer-Sponsored
Comparison Group, 2014
Julie M. Donohue et al. Health Aff 2015;34:1049-1056
©2015 by Project HOPE - The People-to-People Health Foundation, Inc.

14. Odds Ratios Of Any Use Of Specific Therapeutic
Categories Among Marketplace Enrollees Versus The
Comparison Group, January–September 2014
Julie M. Donohue et al. Health Aff 2015;34:1049-1056
©2015 by Project HOPE - The People-to-People Health Foundation, Inc.

15. Future Impacts on Product Design
• Most of the “action” has been in the individual and
Medicaid expansion markets
• Despite this, there are still millions of potential new
members for issuers to enroll
• But the real impacts on product design will be in the
small group market– once transitional policy plans non-
renew
• With the phase-out of the reinsurance program (50%
coinsurance in 2015 and a $90,000 attachment point in
2016), issuers will need to very aggressively manage
higher risk members
• It is likely that many of the remaining members eligible
for individual coverage will exhibit lower than average
risk

16. Mile High Healthcare Analytics Can Assist You...
• Please learn about our new Risk
Adjustment Advisory Service!
• Strategic consulting and business
process assessments of risk adjustment
operations or quality measurement
operations
• Operational and clinical education
around risk adjustment and quality
improvement
• Data analytics and predictive modeling,
focusing on provider behavior and
clinical outcomes
• We design, transform, and load data
into data warehouses
• Redesign of the HRA process and
oversight of the process

17. Next Webinar
• Mile High Healthcare Analytics will
continue our free webinar series.
We will continue to present key risk
adjustment and performance
improvement topics to health plans
and provider groups.
• Then, we will meet again on July
22nd to discuss “Clear Sailing After
King: the Individual and Small-
Group Markets?”
• Register at:
http://www.healthcareanalytics.exp
ert/news-and-events/free-
webinar-series/

18. CONTACT INFORMATION
Richard Lieberman
rlieberman@healthcareanalytics.expert
720-446-7785 (voice)
www.healthcareanalytics.expert

19. THANK YOU FOR JOINING ME!!
Our website continues to evolve. Please
visit us at:
www.healthcareanalytics.expert