1. Health Insurance Regulation: Pricing Presentation for the Alliance for Health Care Reform By Thomas F. Wildsmith, FSA, MAAA, CLU, ChFC Hay Group, Inc. October 17, 2008

2. Premiums must be: Adequate (solvency) Reasonable in relation to benefits (consumer protection – often measured by loss ratio)

3. Standards governing pricing State rules Rate regulations (directly) Solvency regulations (indirectly) Federal rules HIPAA COBRA Actuarial Standards of Practice (ASOPs) Other regulations, such as benefit mandates, also affect the cost of coverage.

4. Actuarial Standards for Rating Factors Objective Clearly related to the likely cost of providing coverage Practical to administer Consistent with applicable law Designed to protect the long-term viability of the insurance program "Risk Classification (for All Practice Areas)," Actuarial Standard of Practice No. 12, Actuarial Standards Board, December 2005

5. Health insurance is a buffet, not an iPod

6. Individual Market Premiums Source: Income, Individual Health Insurance 2006-2007: A Comprehensive Survey of Premiums, Availability and Benefits, AHIP, December 2007 2007 Data

7. What Makes Large Employer Sponsored Coverage Work? Natural Groups Large Employer Contributions High Participation Rates Tax Preferences

8. How do you make guaranteed issue and community rating work together?

9. Wheres the real problem? Source: Income, Individual Health Insurance 2006-2007: A Comprehensive Survey of Premiums, Availability and Benefits, AHIP, December 2007; Income, Poverty, and Health Insurance Coverage in the United States: 2007, U.S. Census Bureau, August 2008 2007 Data AgeAvg. Single PremiumUninsured Rate 18 - 24$1,35928.1% 25 - 29$1,534 25.7% 30 - 34$1,877 35 - 39$2,185 18.3% 40 - 44$2,593 45 - 49$3,051 15.4% 50 - 54$3,628 55 - 59$4,317 12.0% 60 - 64$5,090

10. How do we keep the healthy? Bribe them? Twist their arms? Take them off the hook?

11. Why Are People Uninsured? Source: Uninsured in America: A Chart Book, Kaiser Family Foundation, May 2000 Most Important Reason

12. Premiums must be adequate To ensure solvency For insurers to be willing to offer coverage