2018 ACE Renewal Meeting September 19, 2017 The Davenport, - - PowerPoint PPT Presentation

Welcome to the WCIF 2018 ACE Renewal Meeting

September 19, 2017 The Davenport, Spokane, WA

Healthcare Trends & Medical Plan Rating Model

Presented at the IAC/ACE Meeting The DoubleTree Suites, Seattle, September 14, 2017 The Davenport, Spokane, September 19, 2017

Presented by:

Agenda

2

• Healthcare Trends

– Federal, National and Local Trends – Driving Factors

• New WCIF Medical Plan Rating Model

– Rate Band Evolution – Maintaining WCIF’s Competitive Advantage

• Comments/Questions

Healthcare Trends

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Federally, the direction is unclear:

• “Repeal & Replace” the ACA still looms
• Federal Insurer Tax is back for 2018; adds approx. 3.0%
• Uncertainty about the Individual Mandate enforcement
• Concern grows over Medicaid funding

Healthcare Trends

4

Nationally, states are struggling:

• Individual markets have tanked
• Connecticut will have just two insurers in market
• New England rate increases range from 18% - 60%
• Overall, health insurers facing 3rd year of losses

Healthcare Trends

5

Locally, our markets are in flux:

• Individual plans face steep increases with at least

two counties without any 2018 plan options

• Many Association Health Plan’s looking at double

digit increases

• Some private employers are seeing 25%+ increases
• Small group market renewals will be in mid-to-high

teens

Healthcare Trends

6

Driving Factors

• Healthcare System consolidation continues:

− Anti-trust /competition − Access/quality concerns

• Frequency of intermediate sized claims increasing
• Rx Spike – Specialty medications lead the way
• Insurer reaction: increasing applied Medical/Rx

trends

Healthcare Trends

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Driving Factors

• Medicare/Medicaid cost transfers

Hospital Payor Mix (by admissions): Medicare = 51% Medicaid = 12% Charity = 4% Bad Debt = 5% Private = 28%

New Medical Plan Rating Model

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Market Reaction

• Underwriting is more critical

− Properly evaluating risk − Applying right rate / metrics to groups

• Model Factors carriers use include:

− Age/sex ratios − Geographic spread − Utilization − Persistence

• The way these factors are weighted, valued and

applied are unique to each carrier

New Medical Plan Rating Model

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WCIF has kept pace with these changes

• WCIF philosophy historically committed to a single

rate for each plan:

− Market shifts have made it increasingly difficult to attract better demographic groups

• WCIF needed to address these shifts to achieve

positive growth

− Added 2 rate bands above and below the neutral rate − The 5% spread created a 20% potential spread − Over time all groups would regress to the neutral rate

New Medical Plan Rating Model

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Initial RB Range

• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0%

1 2 3 4 5

Rate Band Evolution - Initial

Initial RB Range

New Medical Plan Rating Model

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Rate Band Evolution

• This worked well initially:

− Rates remained stable − WCIF was able to attract lower risk groups and write higher risk groups at more appropriate rates

• Market continued to more finely define risk and

rating approaches

− Added more rate factors − Tried to design models that would give them better

• pportunities with lower risk groups

New Medical Plan Rating Model

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Rate Band Evolution

• By 2014, WCIF realized it needed to evolve as well

− Transitioned to a 20 rate band rating table with 4% increments − Protected its core group (aka Legacy Groups) in the neutral rate band − Provided ALL groups with opportunities to earn wellness credits

• In 2016, WCIF continued to refine its rating approach

by expanding to 26 rate bands to allow for more flexibility on the top end

• These changes have allowed WCIF to provide

competitive rates across a broader demographic market

New Medical Plan Rating Model

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Current RB Range Initial RB Range

• 60.0%
• 40.0%
• 20.0%

0.0% 20.0% 40.0% 60.0% 80.0%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Rate Band Evolution - Effective 2014

Current RB Range Initial RB Range

New Medical Plan Rating Model

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Rate Band Evolution

• WCIF needed to continue to effectively manage risk

by:

− Attracting lower risk groups − Placing higher risk groups at the right rate − Continue improving the overall health of its risk pool

New Medical Plan Rating Model

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Rate Band Evolution – 2018

• Expand the number of rate bands to get more

“reach” …Premera to 82 and Kaiser to 51

• Decrease the spread between rate band from 4% to

2%

• To a degree, allow Legacy groups to move to their

demographically correct level…although no more than 4 rate bands (approximately 8%)

New Medical Plan Rating Model

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New Expanded RB Range Current RB Range Initial RB Range

• 80.0%
• 60.0%
• 40.0%
• 20.0%

0.0% 20.0% 40.0% 60.0% 80.0%

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83

Rate Band Evolution - Effective 2018

New Expanded RB Range Current RB Range Initial RB Range

New Medical Plan Rating Model

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Rate Band Evolution – 2018

• This approach provides:

– Much broader rate reach both for lower and higher risk groups – Allows us to continue addressing improvement to our

• verall demographic profile
• WCIF will continue to be market aware, making

changes as necessary to provide the best possible rates for our groups.

Thank you!

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Comments / Questions