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Health care reform going into 2014 (ACA)

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  • Health care reform going into 2014 (ACA)

    I want to be able to talk about this if I'm asked about it in an interview.

    Here's how I understand the whole ACA thing so far. If I have some facts wrong, I'd love to know now instead of in an interview. And I'm sure I understand some of this wrong. Here:

    The problem is, uninsured people with health conditions are faced with the challenge of getting coverage. Insurance companies price premiums based on how much in claims they are expected to have to paid out, so sick people are usually charged extremely high amounts or denied health care coverage altogether. The ACA attempts to combat this problem by forcing everyone living in the USA to choose between health care coverage and a tax penalty of (with exceptions) max(2.5% of income, or $695 for an individual and $2085 for a family) by 2016.

    The strategy behind this plan can be broken down into four parts: the individual mandate, reinsurance, risk corridors and risk adjustment. Quickly explained:

    1) The individual mandate forces everyone into the risk pool to avoid the issue of only sick people entering into health insurance and driving up the cost of premiums for everyone.

    2) Reinsurance fees (12 bil in 2014, 8 bil in 2015, and 5 bil in 2016) will be taken from all insurance providers to provide for large costs in the individual market. These fees will be collected through 2014-2016.

    3) Risk corridors will help balance costs to insurance providers by giving dollars to companies that underestimated net premiums, and taking dollars from companies that overestimated net premiums. Risk corridors are triggered when a company misses its mark by 3% on either side, and gives or takes half of what they missed by. (So, if a company expects net premiums to be $100, but experiences net premiums to be $105, they missed by 5%, so they will be given $1 funded through the government by companies that overestimated their costs). This component of the ACA will be implemented 2014-2015 on individual and small group markets).

    4) Risk adjustment takes into consideration the fact that different insurance companies have different risk pools. Dollars from companies with healthier than average risk pools will be transferred to companies with lower than average risk pools.

    There will also be individual and small business exchanges created in every state. The idea is to make health insurance easier to buy, and also a little less obfuscated and more transparent. Plans will be offered as bronze, silver, gold, and platinum, where bronze represents more cost sharing and platinum less.

    By 2017, we are expecting a decrease in uninsured from 50 mil to about 35 mil (According to an analysis by Milliman).

    Opinions, fixes, additional info, and emotions all welcomed. By the way, I'd be interested in a short list of online sources that are trusted by actuaries so I don't sound like an idiot referencing something.
    Last edited by leex3683; August 11 2013, 04:35 PM.

  • #2
    You will find some good discussions (as well as sources) here:


    • #3
      Thanks! Maybe my post was obsolete. I'm checking out your link, and I'll delete this if it is.


      • #4
        Discussions on that provided link look mostly like article postings. That's great. I also want to start conversations, though.

        My goal here is to become more articulate when talking about health care. Anyone who wants to talk about healthcare or healthcare changes should post here.

        I'm sure there are other changes that I don't know about. I'd like to hear from health actuaries and/or anyone is medical fields who may read these. I know another major change that is meant to go into effect 2014 oct is changes from icd-9 to icd-10 codes. This is impacting companies financially as well, and as I understand it, many health actuaries in consulting are working on this right now.

        So again. Anything health related that people want to talk about, please post.
        Last edited by leex3683; September 20 2013, 09:05 PM.