1. San Mateo County Uninsured Feasibility Analysis
April 23, 2007 .
Stan Roberts, FSA, MAAA
Craig Keizur, FSA, MAAA

2. Contents Milliman Introduction Data Sources Cost Models
Claim Projections
Considerations
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3. About Milliman
Premier consulting and actuarial firm serving clients in four specific practice areas since 1947
Healthcare, Life/Financial, Pension/Employee Benefits, and Property/Casualty
More than 1,800 employees including actuaries, clinicians, technologists, and operations consultants, and local presence in 41 offices worldwide.
Milliman’s healthcare practice currently provides consulting services for over 125 health plans and 300 hospitals across the U.S.
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4. Milliman Capabilities
Actuarial Consulting
Data Warehousing
Clinical Consulting
Actuarial Consulting: Commercial, Medicare, Medicaid, and Other Public and Private Payers
i. Pricing and Financial Projections (Feasibility)
ii. Reserve Analysis (e.g., IBNR)
iii. Capitation Development and Risk Sharing Analysis
iv. Rate Filing Support
v. Benchmarking and Actual vs. Expected Review
vi. Hospital and Provider Contract Analysis and Review
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5. Pricing Process for Health Plan of San Mateo Uninsured Program
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6. Low Income / Uninsured Considerations
Why Costs May Be Higher Than Commercial Population
Low income people are generally less healthy than higher income
Uninsurables
Pent-up demand
Adverse selection from those that elect coverage
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7. Low Income / Uninsured Considerations
Why Costs May Be Lower Than Commercial Population
Not “Benefit Aware”
May qualify for other source of coverage (Medi-Cal)
Better discounts (lower provider reimbursement) than commercial (e.g., Medicare or Medicaid levels)
Healthy opt-out
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8. Low Income / Uninsured Considerations
Other drivers of cost
Premium Requirements
Benefit Design (e.g.,cost sharing)
Demographics
Discounts
Enrollment Approach
Coordination with other Coverage
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9. Data Sources Milliman “Health Cost Guidelines” Internal Research
The HCGs are a flexible tool for modeling many different benefit plan design scenarios for multiple populations and payers. Underlying our HCG models are claim probability distributions which are statistical tools that assist in valuing deductible and member out-of-pocket maximum cost sharing. Public and proprietary data sources
Utilization per 1000
Community Billed Charges
Internal Research
Client Data
Other State Programs
State and other Public/Private Data
Claim Probability Distributions
Client Assumptions
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10. Modeling Adjustments Region = San Mateo County, CA
Population = Uninsured
Demographics = Varies by FPL cohort
Discounts / Reimbursement = 100% Medicare Allowable
Trends
Center Date = July 1, 2007
Other
Adverse Selection
Administration = n/a at this time
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11. Plan Offerings HMO-Style Plan Design High Deductible
Complex Chronic vs. Healthy Individual
“Coverage” vs. “Insurance”
High Deductible
First dollar preventive covered
“Donut Hole”
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12. Plan Design Plan Complex Chronic / Healthy Individual
Basic + High Deductible
FPL Eligibility
0%-200%
200% - 400%
100% - 400%
First Dollar Basic (Preventive)
n/a
(assumed) $1,000
Deductible (Individual) $0
$2,000
OOP Max (Individual)
$5,000
Office Copay
(PCP/Spec)
$0/$10
$10/$25
$20/$35
Emergency Copay
$25
$50
$100
Rx Copay
(Generic/Brand)
$3/$10
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13. Gross and Net Claim Cost Projections (July 1, 2007 Center Date)
Plan
CC/HI:
0-200% %
Basic + High Ded
Gross Claim Costs (PMPM)
Inpatient (non-maternity)
$50.33
$56.51
$52.63
Outpatient (non-maternity)
47.19
48.98
46.53
Physician (non-maternity)
113.61
112.95
108.22
Maternity (Hosp, Phys)
9.76
22.61
27.59
Prescription Drug
51.35
53.72
50.83
Dental
17.27
Other
17.96
18.46
18.17
Subtotal
$307.47
$330.50
$321.24
- Value of Cost Sharing
($13.90)
($38.91)
($78.32)
= Net PMPM Claim Cost
$293.57
$291.59
$242.92
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14. Net Claim Cost - Age Illustration (July 1, 2007 Center Date)
Plan
CC/HI:
0-200% %
Basic + High Ded
Total Projection
$293.57
$291.59
$242.92
Adult: 25 Year Old
$209.95
$203.15
$186.15
Adult: 45 Year Old
$350.20
$308.55
$262.65
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15. Illustrative Monthly Premium Rates* (July 1, 2007 Center Date)
Plan
CC/HI:
0-200% %
Basic + High Ded
Total Projection
$345
$343
$286
Adult: 25 Year Old
$247
$239
$219
Adult: 45 Year Old
$412
$363
$309
* Assumes illustrative administration and profit load of 15%
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16. Considerations “Coverage” vs. “Insurance”
Carve out benefits or members?
Benefits (no reductions reflected in pricing)
Out of area (1-2%)
Rx discounts – Depends on relationship between 340B discounts and those assumed in pricing
Members
Maternity costs already removed to account for 0-150% FPL pregnant woman coverage. Result was approximately 7% savings in 0-200% FPL CC/HI plan.
Projected claim costs reflect “moderate” plan management efforts
30%-50% Degree of Healthcare Management
Can estimate additional savings from plan management efforts
Impact of mandate
Mitigate adverse selection
Benefit Options
Higher deductible
Benefit maximum
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17. Outstanding Issues Confirm Pricing Assumptions Finalize Plan Options
Benefit design
Consider Subsidies
Consider Premium Rate Structure
Age-Bands
Multi-Year Cost Projections
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