This presentation from Mile High Healthcare Analytics explores how to capture accurate healthcare marketplace demographics and what these demographics tell us about re-adjusting product design in order to gain valuable insights on how to design products specifically oriented to your exchange members and which existing products make the most sense for your plan's actual population.

1. Population Risk Scores and Plan Design
RISE California Summit
July 20, 2015
Richard Lieberman
Chief Data Scientist (aka “Mad Scientist”)

2. Today’s Agenda
• I will discuss product design in the
context of:
• Transitional policy
• Small-group vs. individual market demand
• The role of the shared responsibility
payment
• What kind of people enrolled in
Marketplace coverage in 2014
• Where to focus product design efforts

3. Overarching Theme
• The people who have enrolled in small-
group and individual insurance products
are only a fraction of those who will
ultimately enroll in the years ahead
• It is too early to draw definitive
conclusions about the risk profile of
members
• Product design will need to remain fluid

4. We Know the ACA is Increasing Coverage Access

5. ACA Creates Winners and Losers
• It is impossible to move from a system where people with
preexisting conditions can be denied health coverage or
charged more to a system where people pay the same
premium regardless of their health without some who have
previously benefited having to pay more
• Some of the winners might perceive themselves as losers
• Prior reforms of the US health care system typically
created only winners
• Medicare beneficiaries are uniformly better off than they
would be without coverage

6. What Happens When Politics Drives Public Policy!

7. Is Transitional Policy a Little Train Wreck?
• The Administration gave states the option of
letting insurers continue individual and small
group plans that would otherwise have been
cancelled in 2014, because they did not comply
with ACA standards, until October 1, 2017
• Thirty-five states are allowing issuers to
continue transitional plans for one or more years
• 21 states are allowing issuers extend these plans
through 2017

8. Or a Big Train Wreck?
• “Millions of small businesses nationwide — and
an estimated 70% of California's small firms that
offer employee health insurance — haven't yet
faced all the sweeping changes that resulted from
the ACA”
• Colorado has about 190,000 people in transitional
plans- 75,000 with individual coverage and about
115,000 people in small group plans
• There are only 140,327 enrolled in individual market
plans
Sources: http://www.latimes.com/business/la-fi-healthcare-watch-20150413-story.html
and http://www.lifehealthpro.com/2015/03/13/colorado-firm-on-ppaca-compliance

9. Individual Mandate Penalties Increase Over Time….

10. Mandate Penalties Are Still A Suggestion!
27-Year Old Individual
Percent of Federal Poverty Level
2015 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $325 $469 $704 $938 $1,173
Lowest Cost Subsidized Bronze Annual
Annual Premium $0 $860 $2,162 $2,162 $2,162
Difference ($325) $391 $1,458 $1,224 $989
Percent of Federal Poverty Level
2016 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $695 $695 $875 $1,167 $1,459
Lowest Cost Subsidized Bronze Annual
Annual Premium $0 $946 $2,378 $2,378 $2,378
Difference ($695) ($1,641) $1,503 $1,211 $919
Source of 2015 Results: “Individual Mandate Penalty May be Too Low to
Attract Middle-Income Individuals to Enroll in Exchanges” Avalere Health,
April 24, 2015 (www.avalere.com)

11. Even for Older People…Penalties Are Minimal
50-Year Old Individual
Percent of Federal Poverty Level
2015 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $325 $469 $704 $938 $1,173
Lowest Cost Subsidized Bronze Annual
Annual Premium $0 $424 $2,291 $3,407 $3,684
Difference ($325) ($45) $1,587 $2,469 $2,511
Percent of Federal Poverty Level
2016 Plan Year 100% 200% 300% 400% 500%
Individual Mandate Penalty $695 $695 $875 $1,167 $1,459
Lowest Cost Subsidized Bronze Annual
Annual Premium $0 $466 $2,520 $3,748 $4,052
Difference ($695) ($1,161) $1,645 $2,581 $2,594
Source of 2015 Results: “Individual Mandate Penalty May be Too Low to
Attract Middle-Income Individuals to Enroll in Exchanges” Avalere Health,
April 24, 2015 (www.avalere.com)

12. Are Sicker-than-Average People Enrolling?
• Researchers used Express Scripts data to compare
Marketplace enrollees to a control group of members with
employer-sponsored insurance (ESI)
• There were marked differences in age and medication use
between early and later Marketplace enrollees
• Marketplace enrollees had lower overall drug spending and
medication use than did the comparison group
• Out-of-pocket expenses for specialty medicines were 36 percent
higher among Marketplace enrollees

13. Monthly Prescriptions Filled, By Month Of Enrollment In The
Marketplace And The Employer-Sponsored Comparison
Group, 2014
Julie M. Donohue et al. Health Aff 2015;34:1049-1056
©2015 by Project HOPE - The People-to-People Health Foundation, Inc.

14. Odds Ratios Of Any Use Of Specific Therapeutic Categories
Among Marketplace Enrollees Versus The Comparison Group,
January–September 2014
Julie M. Donohue et al. Health Aff 2015;34:1049-1056
©2015 by Project HOPE - The People-to-People Health Foundation, Inc.

15. Future Impacts on Product Design
• Most of the “action” has been in the individual and Medicaid
expansion markets
• There are still remain millions of potential new members for issuers to
enroll
• But the real impacts on product design will be in the small group
market– once transitional policy plans non-renew
• With the phase-out of the reinsurance program (50% coinsurance in
2015 and a $90,000 attachment point in 2016), issuers will need to
aggressively manage higher risk members
• It is likely that many of the remaining members eligible for individual
coverage will exhibit lower than average risk

16. Mile High Healthcare Analytics Can Assist You...
Learn about our new Risk Adjustment Advisory Service:
• Strategic consulting and business process assessments of
risk adjustment operations or quality measurement
operations
• Operational and clinical education around risk adjustment
and quality improvement
• Data analytics and predictive modeling, focusing on
provider behavior and clinical outcomes
• We design, transform, and load data into data warehouses
• Redesign of the HRA process and oversight of the process

17. Webinar Series
• Mile High Healthcare Analytics will
continue our free webinar series. We
will continue to present key risk
adjustment and performance
improvement topics to health plans and
provider groups.
• Then, we will meet again on July 22nd to
discuss “Clear Sailing After King: the
Individual and Small-Group Markets?”
Register at: http://www.healthcareanalytics.expert/news-and-events/free-webinar-series/

18. CONTACT INFORMATION
Richard Lieberman
rlieberman@healthcareanalytics.expert
720-446-7785 (voice)
www.healthcareanalytics.expert

19. THANK YOU FOR JOINING ME!!
Our website continues to evolve. Please visit us
at:
www.healthcareanalytics.expert