Risk Pools Impact on Commercial Markets The Ohio Study Liz Leif, FSA NASCHIP Conference October 19, 2006

About The Ohio Study Purpose: To determine whether a qualified high-risk pool is feasible for the State of Ohio Commissioned by the Ohio Department of Insurance Paid for with federal grant funding Completed in June 2005

About Ohio Population approximately 11 million 10% are on Medicaid, 12% are on Medicare Approximately 12% are uninsured, or 1.3 million people –65% have incomes below 200% FPL –82% are in families with at least one worker –21% report poor or fair health status No high-risk pool – instead, an open enrollment law

Ohio Open Enrollment Law Begins January 1 of each year Individual carriers must accept individual applicants in the order in which they apply Basic and standard or similar plans Can use 12-month pre-ex Rates cannot exceed 2.5 times the highest rate charged any other individual with similar benefits Carrier enrollment limited to 0.5% of total insured individuals in the state

Ohio Open Enrollment Law Also applies to federally-eligible individuals but rules are slightly different Pre-ex cannot be applied Rates cannot exceed 2.0 times the midpoint rate charged to any other individual with similar benefits Carrier enrollment limited to 0.5% of total insured individuals in the state unless all carriers have met the enrollment limit

Open Enrollment Results Type # Insured Premium PMPM Claims PMPM Not Federally Eligible934$595$632 Federally Eligible863$596$692 Total1,797 Source: 2003 Ohio DOI Annual Report of Ohio Health Insurance Business

Findings of the Study A high-risk pool is a viable option for Ohio It would not solve the problem of affordability for the uninsured Projected enrollment: initially 2,800 growing to 17,250 Would reduce the number of uninsured by 15,000 Average premium at 150% SRR = $476 (2006) Initial funding requirement of $20 million

Market Impacts Individual –1,800 open enrollment and HIPAA members would move to the high-risk pool for lower rates and better benefits –Represents less than 1% of the total individual lives insured Small group: No impact Large group: No impact

Other Impacts of a High-Risk Pool Improved health status for 15,000 previously uninsured New money for the provider community –$129 million to hospitals for currently uncompensated care –$164 million to hospitals, physicians, and pharmacies for new care

Current Status “We are not certain at this point whether the high risk pool legislation will move this year. It does not look good as we have not reached consensus on the funding issue. We will have a new legislature beginning in January, and the bill could be re-introduced again at that time, but we are not certain.” Doug Anderson, Ohio Department of Insurance 9/21/06

Leif Associates Actuarial consulting firm in Denver, CO Actuaries for high-risk pools in Colorado, Florida, Nebraska, New Mexico, Washington For a copy of the study, go to or contact: Liz Leif, FSA Leif Associates, Inc Arapahoe Street, Tower One, Suite 410 Denver, CO Phone: (303) Fax: (303)