New Hampshire Insurance Department Preliminary Report of the 2016 Health Care Premium and Claim Cost Drivers NOVEMBER 3, 2017 JENN SMAGULA FSA, MAAA GORMAN ACTUARIAL, INC.
Goal of Annual Hearing & Report In May 2010, New Hampshire passed RSA 420-G:14-a, V-VII (Chapter 240 of the laws of 2010, an act requiring public hearings concerning health insurance cost increases). In 2014, SB 345 amended Section VI: “The commissioner shall prepare an annual report concerning premium rates in the health insurance market and the factors that have contributed to rate increases during prior years.” The report shall be based on the analysis of information and data, including items such as medical loss ratios, cost of medical care by payment type and insurance premiums by network, among other things. 2 GORMAN ACTUARIAL, INC.
National Comparisons 3 GORMAN ACTUARIAL, INC.
The uninsured rate in New Hampshire has decreased from 10.7% in 2013 (pre ACA) to 5.9% in 2016. Data Source: U.S. Census Bureau, American Community Survey 1-Year Estimate for 2013-2016 4 GORMAN ACTUARIAL, INC.
New Hampshire ranks 9 th highest in expenditures Data Source: Centers for Medicare and Medicaid Services, State Health Expenditure Accounts, 2014 5 GORMAN ACTUARIAL, INC.
NH trend is slightly higher than national average Data Source: Centers for Medicare and Medicaid Services, State Health Expenditure Accounts, 2009 and 2014 6 GORMAN ACTUARIAL, INC.
NH health care spending in line with high income Data Source: Centers for Medicare and Medicaid Services, State Health Expenditure Accounts 2014; Median income sourced from U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements. 7 GORMAN ACTUARIAL, INC.
New Hampshire Market Overview 8 GORMAN ACTUARIAL, INC.
New Hampshire Commercial Fully-Insured and Self- Insured Markets continue to be dominated by three insurers, but there have been shifts over time for certain market segments Anthem/Matthew Thornton CIGNA Minuteman Community Health Options Ambetter (Centene) Tufts Other (insurers less than 2%) Harvard Pilgrim Note: Values may not total to 100% due to rounding. Data Source: NHID 2015 and 2017 Supplemental Data Request; Commercial population including New Hampshire situs membership only. Excludes FEHBP population. 9 GORMAN ACTUARIAL, INC.
Small Group Market membership has shifted from Anthem/Matthew Thornton to Harvard Pilgrim Anthem/Matthew Thornton Community Health Options Other (insurers less than 2%) Harvard Pilgrim Note: Values may not total to 100% due to rounding. Data Source: NHID 2015 and 2017 Supplemental Data Request; Commercial population including New Hampshire situs membership only. Excludes FEHBP population. 10 GORMAN ACTUARIAL, INC.
Individual Market distribution by insurer has changed dramatically with new insurers entering in 2015 and 2016 Anthem/Matthew Thornton Ambetter (Centene) Community Health Options Other (insurers less than 2%) Harvard Pilgrim Minuteman Note: Values may not total to 100% due to rounding. Data Source: NHID 2015 and 2017 Supplemental Data Request; Commercial population including New Hampshire situs membership only. Excludes FEHBP population. 11 GORMAN ACTUARIAL, INC.
Individual Market changes continue beyond 2016 New Hampshire Individual Market 2014 2015 2016 2017 2018 Anthem/Matthew Thornton Ambetter (Centene) Assurant/Time Harvard Pilgrim Minuteman Community Health Options Off Exchange Only On and Off Exchange 12 GORMAN ACTUARIAL, INC.
Profit margins have decreased in the Group Markets and remain higher than the Individual Market in 2016 Individual Small Group Large Group Medical & Pharmacy Claims Other State & Federal Taxes Profit (Positive) ACA Charges Admin Expenses & Fees Profit (Negative) *Information shown prior to any federal MLR rebate payments Data Source: 2016 federal MLR reports provided by insurers. Anthem provided additional information for FEHBP to make necessary adjustments to exclude from Large Group. 13 GORMAN ACTUARIAL, INC.
Individual Market 14 GORMAN ACTUARIAL, INC.
The Individual Market grew from 58,000 members in 2015 to 104,000 members in 2017 due to growth from the NH PAP and, to a smaller extent, the Individual Exchange Market Individual NH PAP Small Group Individual Non-Exchange Large Group Individual Exchange Data Source: NHID Annual Hearing data 2015 and 2017; Excludes FEHBP population 15 GORMAN ACTUARIAL, INC.
The Individual Market is diverse 104K Individual Market Members 16K Non- 88K Exchange Exchange 7K 45K non- NH 9K Non- 43K NH PAP Grandfathered PAP Grandfathered or Transitional* *NOT PART OF SINGLE RISK POOL 13K No Cost Sharing 16K No Cost Sharing 16K Cost Sharing Reduction Subsidy, Reduction Subsidy, No Reduction Subsidy With Federal Premium Federal Premium AND Federal Premium Subsidy Subsidy Subsidy Data Source: NHID Annual Hearing data 2017; Centers for Medicare and Medicaid Services. August, 2017 Effectuated Enrollment Snapshot; Monthly NHID QHP Reports, August 2017. 16 GORMAN ACTUARIAL, INC.
In 2017, 74% of Individual Market Single Risk Pool is subsidized Data Source: Enrollment was estimated using the QHP Monthly Enrollment Reports, CMS’s 2017 Effectuated Enrollment Snapshot Report, and information received from the 2017 AH data. GORMAN ACTUARIAL, INC. 17
Non-subsidized individuals pay significantly more than subsidized individuals These charts assume the age of the adult enrollee is 50 and that the APTC enrollees are enrolled in the 2nd lowest cost silver plan. It also assumes the enrollees in the non-subsidized market are enrolled in the plan with the median rate among silver plan offerings. 18 GORMAN ACTUARIAL, INC.
Individual Market experienced larger increases in premium in 2016 compared to 2015, driven in part by the introduction of NH PAP Data Source: NHID Supplemental Data Request 2015, 2016 and 2017 19 GORMAN ACTUARIAL, INC.
Average deductible levels in the Individual Market have increased 11% from 2014 to 2016, driven by the unsubsidized Exchange population Data Source: NHID Supplemental Data Request 2015 and 2017 20 GORMAN ACTUARIAL, INC.
$26 million was distributed among insurers in the Individual Market through risk adjustment in 2016 Data Sources: Centers for Medicare and Medicaid Services. Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014, 2015 and 2016 Benefit Years 21 GORMAN ACTUARIAL, INC.
More than half of the Individual Market trend in 2016 is driven by the introduction of PAP Data Source: NHID Annual Hearing data 2017. 22 GORMAN ACTUARIAL, INC.
The average PAP population’s medical costs are 24% higher than the average Non-PAP population’s Data Source: NHID Annual Hearing data 2017. 23 GORMAN ACTUARIAL, INC.
Inpatient costs are one of the key drivers of the differences between Non-PAP and PAP populations Data Source: NHID Annual Hearing data 2017. 24 GORMAN ACTUARIAL, INC.
Higher utilization in Individual Market is driven by NH PAP population Data Source: NHID Annual Hearing data 2017. 25 GORMAN ACTUARIAL, INC.
Utilization is generally much higher in the Individual Market compared to the Group Markets Data Source: NHID Annual Hearing data 2017. Health Care Cost Institute Data (HCCI) based on 2015 employer sponsored insurance data. 26 GORMAN ACTUARIAL, INC.
Group Markets 27 GORMAN ACTUARIAL, INC.
Small Group Market experiencing lowest change in premium Data Source: NHID Supplemental Data Request 2015, 2016 and 2017; Excludes FEHBP population. 28 GORMAN ACTUARIAL, INC.
Average deductible levels in the Small Group Market have not changed significantly CY 2014 = $3,082 CY 2016 = $3,113 Average Deductible: Data Source: NHID Supplemental Data Request 2015 and 2017. Single policy, in-network deductibles. 29 GORMAN ACTUARIAL, INC.
A much smaller amount was distributed in the Small Group Market through risk adjustment Data Sources: Centers for Medicare and Medicaid Services. Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014, 2015 and 2016 Benefit Years 30 GORMAN ACTUARIAL, INC.
Uptick in allowed claims trends across all market segments Data Source: NHID Annual Hearing data 2016 and 2017 . 31 GORMAN ACTUARIAL, INC.
Half of the allowed claims PMPM trend is due to utilization increases, which is significantly different than past years Data Source: NHID Annual Hearing data 2016 and 2017. 32 GORMAN ACTUARIAL, INC.
Pharmacy and Other category have the largest trends over period of 2014 to 2016, while Inpatient trends have experienced large fluctuations Data Source: NHID Annual Hearing data 2016 and 2017. 33 GORMAN ACTUARIAL, INC.
Pharmacy 34 GORMAN ACTUARIAL, INC.
Pharmacy increases have contributed 37% to the group market trend 2014 to 2016 Data Source: NHID Annual Hearing data 2016 and 2017. Non FFS claims only. 35 GORMAN ACTUARIAL, INC.
Within pharmacy, specialty drugs have the highest trend at 14% Data Source: NHID Annual Hearing data 2017. Small Group and Large Group Only. 36 GORMAN ACTUARIAL, INC.
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