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Who gets coverage?. THE HEALTH INSURANCE INDUSTRY VIEWPOINT. ONLY PARENTS WITH SICK CHILDREN WILL BUY COVERAGE. SO, IT’S TOO EXPENSIVE TO COVER OKLAHOMA NEWBORNS IN THE INDIVIDUAL MARKET. HOW MUCH ARE THEY PAYING IN CLAIMS? MEDICAL LOSS RATIO ARE THEY SOLVENT? RISK BASED CAPITAL RATIO.

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Presentation Transcript
the health insurance industry viewpoint
THE HEALTH INSURANCE INDUSTRY VIEWPOINT

ONLY PARENTS WITH SICK CHILDREN WILL BUY COVERAGE. SO, IT’S TOO EXPENSIVE TO COVER OKLAHOMA NEWBORNS IN THE INDIVIDUAL MARKET.

slide3

HOW MUCH ARE THEY PAYING IN CLAIMS?

MEDICAL LOSS RATIO

ARE THEY SOLVENT?

RISK BASED CAPITAL RATIO

medical loss ratio
Medical Loss Ratio

Total Claims Paid / Total Premiums Collected

What percentage of earned premiums are paid out in medical claims

medical loss ratio1
Medical Loss Ratio

If an insurance company collects $100 in earned premiums and pays out $70 in total claims, its medical loss ratio is 70%.

$70/$100 = 70%

medical loss ratio current law
Medical Loss Ratio - Current Law
  • Oklahoma Law = 65%
  • Federal Law = 80%
              • (85% for large group market)
risk based capital ratio
RISK BASED CAPITAL RATIO
  • A SOLVENCY TEST
  • THE MINIMUM AMOUNT OF CAPITAL APPROPRIATE TO PAY CLAIMS
risk based capital ratio1
RISK BASED CAPITAL RATIO
  • NUMERATOR -- NET WORTH
      • (CAPITAL PLUS SURPLUS)
  • DENOMINATOR – ADJUSTED NET WORTH
      • ADJUSTED DOWNWARD BY VARIOUS RISKS – ASSET RISK, UNDERWRITING RISK, CREDIT RISK
risk based capital ratio2
RISK BASED CAPITAL RATIO
  • NET WORTH/ADJUSTED NET WORTH
  • MINIMUM LEVEL – 200%
      • NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS, MODEL ACT 315
the health insurance industry viewpoint1
THE HEALTH INSURANCE INDUSTRY VIEWPOINT

ONLY PARENTS WITH SICK CHILDREN WILL BUY COVERAGE. SO, IT’S TOO EXPENSIVE TO COVER OKLAHOMANNEWBORNS IN THE INDIVIDUAL MARKET.

how many babies
HOW MANY BABIES?

OKLAHOMA BIRTH 55,000

COVERED BY MEDICAID (64%) 35,200

COVERED BY GROUP INS 18,900 (extrapolation from Dept. of Health)

UNINSURED OR SELF-PAY 900 NEWBORN BIRTHS

what did these 900 babies cost
WHAT DID THESE 900 BABIES COST?
  • FROM DEPARTMENT OF HEALTH, THE HOSPITAL CHARGES WERE $3.5 MILLION OR ABOUT $4,000 PER DELIVERY.
  • HOW MUCH DOES THIS INSURANCE INDUSTRY OWE OKLAHOMANS IN PREMIUM REBATES
    • $12 MILLION
existing coverage
EXISTING COVERAGE
  • LOW-BIRTH WEIGHT BABIES
    • FOR BABIES WEIGHING LESS THAN 2 POUNDS, 10 OUNCES, MEDICAID PROVIDES COVERAGE REGARDLESS OF FAMILY INCOME.
    • UNDER FEDERAL LAW, UNINSURED BABIES WILL BE ELIGIBLE FOR LOW COST PLANS BY THE AGE OF 6 MONTHS.
      • (OKLAHOMA HAS RECEIVED $66 MILLION IN FEDERAL MONEY FOR THE HIGH RISK POOL)
who is excluded
WHO IS EXCLUDED
  • PARENTS OF APPROXIMATELY 1,000 NEWBORNS (NOT LOW BIRTH WEIGHT) FOR THE FIRST SIX MONTHS OF LIFE.
    • APPROXIMATELY 5% WILL HAVE HIGH COST DELIVERY.
    • WHAT WOULD IT COST TO PROVIDE COVERAGE FOR THIS POPULATION.
individual market actuarial review
INDIVIDUAL MARKET – ACTUARIAL REVIEW
  • EXPECTED CLAIMS FOR OKLAHOMANS FROM BIRTH TO AGE 19

MINUS

  • EXPECTED CLAIMS FOR OKLAHOMANS FROM AGE 1 TO AGE 19

EQUALS

  • COST TO COVER OKLAHOMANS FROM BIRTH TO AGE 1
individual market newborns
INDIVIDUAL MARKETNEWBORNS
  • SUPPOSE, YOU HAVE THE FOLLOWING INFORMATION:
    • COST TO COVER INFANTS
    • MLR WELL BELOW FEDERAL REQUIREMENT
    • RBCR 4-5 TIMES ABOVE REGULATORY MINIMUMS
    • WITHOUT A WAIVER FROM FEDERAL LAW, YOU OWE ABOUT $12 MILLION IN REBATES TO OKLAHOMA POLICY HOLDERS.
  • WHAT DOES IT SAY ABOUT YOUR CORPORATE CULTURE TO EXCLUDE INFANTS?
individual market newborns1
INDIVIDUAL MARKET – NEWBORNS

IF INSURANCE FIRMS ARE REQUIRED TO COVER FROM BIRTH TO AGE 1, WHAT IMPACT WOULD THIS HAVE ON THEIR MEDICAL LOSS RATIOS?

WOULD THIS GET THEM TO THE 80% REQUIREMENT?

individual market newborns2
INDIVIDUAL MARKET – NEWBORNS

IF INSURANCE FIRMS ARE REQUIRED TO COVER FROM BIRTH TO AGE 1, WHAT IMPACT WOULD THIS HAVE ON THEIR RISK BASED CAPITAL RATIOS?

WOULD THEIR SOLVENCY BE JEOPARDIZED UNDER NAIC TEST?

individual market newborns3
INDIVIDUAL MARKET – NEWBORNS
  • DOESN’T THE DEPARTMENT OF INSURANCE HAVE LEVERAGE THEY DID NOT USE?
    • USE OF BULLY PULPIT
    • PUBLIC ADVOCACY
    • REFUSAL TO REQUEST WAIVER FROM MLR
      • (THAT’S $12 MILLION CURRENTLY OWED TO OKLAHOMA POLICY HOLDERS)

IS IT RIGHT TO MAKE A DEAL THAT LEAVES OUT BABIES?

individual market newborns4
INDIVIDUAL MARKET – NEWBORNS

WE DON’T KNOW WHAT HEALTH REFORM WILL LOOK LIKE OVER THE NEXT 3 YEARS, UNTIL FEDERAL LAW IS EITHER OVERTURNED OR IMPLEMENTED?

WHY NOT COVER INFANTS FOR THIS 3 YEAR PERIOD AND JUST MONITOR THE IMPACT ON MLR AND RBCR?

individual market newborns5
INDIVIDUAL MARKETNEWBORNS
  • SOME INSURERS WANT TO DO THE RIGHT THING

"Insurers said…[w]e'llstay in the marketplace and offer the coverage, but only if our competitors do,' …But when everybody else started pulling out, it had a domino effect.”

Robert Zirkelbach, America’s Health Insurance Plans

http://insurancenewsnet.com/article.aspx?id=226607&type=newswires

individual market newborns6
INDIVIDUAL MARKETNEWBORNS
  • WHAT THAT MEANS

“WE’LL DO THE RIGHT THING IF YOU MAKE US.”

individual market newborns7
INDIVIDUAL MARKETNEWBORNS
  • SO – LET’S MAKE THEM DO THE RIGHT THING.
  • THERE’S A SIMPLE SOLUTION THAT PROTECTS OKLAHOMA NEWBORNS
  • MANDATE COVERAGE!
slide30

First, they came for the trade unionists, and I did not speak out because I was not a trade unionist.

Then they came for the Jews, and I did not speak out because I was not a Jew.

Then they came for me, and there was no one left to speak out for me.

Martin Niemoller