Gayle is joined by Daniel Cruz, health actuary and consultant, to discuss the state of the actuarial profession in light of recent communications about rating of Affordable Care Act plans.  

The actuarial profession plays an important role in safeguarding the institution of insurance for the benefit of society.  We are a self-regulated profession.  We rely on a combination of standards of practice, professionalism, examinations, continuing education, and a disciplinary review process to ensure that we fulfill our obligations to the public ourselves, without oversight or control from outside the actuarial profession.  

Gayle mentioned two recent communications related to ACA rating, which cause her to wonder what is happening behind the scenes. Why are committees of the American Academy of Actuaries apparently implying that actuaries don’t have to follow laws and regulations when it comes to ACA rating, while patient advocacy groups are warning Health and Human Services that actuaries are not following rating rules?  Beyond the questions about the actions of actuaries rating ACA plans, these communications create concern about the AAA’s procedures for writing such letters.  What is the procedure for AAA committees to make pronouncements about how actuaries should do their jobs?  Are views of all ACA pricing actuaries solicited and considered before sending the letter to the government agency charged with regulating ACA plans?  If not, does that call into question the ability of the actuarial profession to self-regulate?

With the stage set with these questions, Gayle was joined by Daniel Cruz.  Daniel took us back through the history of the ACA marketplace and explained that the single risk pool requirement was not enforced in the chaos that unfolded in the first couple years of the ACA marketplace.  You’ll recall that numerous carriers left the market and others raised rates dramatically to ensure they could get to profitability and continue to offer ACA plans going forward.  At first it was not clear what precisely had happened, but everyone breathed a sigh of relief when the ACA marketplace stabilized, and carriers began to return.  

Continuing the story, Daniel explained how the problem became clearer after cost-sharing reduction payments were ceased and changes were made to the ACA subsidy system starting in the 2018 plan year.  Daniel shared his views of why the failure to follow the single risk pool requirement has not been remedied, and why it is coming to light now.  He explained how the interests of consumers are not being protected when the ACA single risk pool requirement is not enforced.  

While it would be preferable for challenges facing actuarial practice to be discussed in an open, transparent and timely manner so that we can collectively ensure we fulfill our obligations to the public, it’s not too late. Daniel left us with a possible silver lining.  He suggested that perhaps we are turning the corner on this issue; perhaps the letters signify that the actuarial profession is ready to have the conversation we should have had four years ago and show that we can self-regulate.

This actuary hopes he is right.

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In this episode, Gayle and Joyce are joined by Dr. Lee Kurisko, a Canadian radiologist who left practice in Thunder Bay Ontario to pursue a career stateside after becoming disillusioned with Canada’s centralized approach to healthcare delivery. His firsthand knowledge of waiting lines, physician and staff shortages, and outdated imaging equipment forced a change of heart from the great confidence he initially felt in Canada’s healthcare system. He soon discovered greater efficiency and less rationed care in the U.S. and while our current system is not without challenges, he feels it is far superior to Canada’s system. Canadians, Dr. Kurisko explained, are indoctrinated into the notion that government should provide healthcare and that U.S. citizens are being left in the cold because the government does not directly arrange and pay for all medical treatment. He shares how the Canadian cultural ethos takes considerable pride in the government’s role in healthcare. Indeed, surveys suggest that Canadians remain very proud of their system even though approximately 17 percent lack access to a primary care physician. This ethos is even more puzzling when you consider that in Canada, a primary care referral is needed in order to receive specialty care; those who do not have a primary care physician also do not have access to specialty care in Canada. 

Dr. Kurisko’s move to the United States was in part driven by exhaustion where he and his two colleagues daily confronted 10 to 14 hours of workload meant for 13 radiologists. He states that because governments are constrained by budgets (vs. profits seen with private enterprise) – it leads to a severe and perverse form of rationing which is not only impractical but immoral as well. The view that healthcare is a right necessarily implies that medical providers’ freedoms can be curtailed; after all, someone must provide the discounted or free service that another person claims a right to receive.

The inherent complexity seen in healthcare pleads the case for bottom-up solutions that lead to less rationed, better quality care. He suggests that because healthcare is so important it behooves us to seriously consider limiting the role of government. 

Dr. Kurisko advocates for an uninterrupted doctor-patient relationship without arbitrary price controls. He suggests that a better value proposition is possible if we embrace transparent pricing that facilitates the delivery of a desired service – just as we do with other goods and services provided in the United States. In that sense, healthcare is not special. Our conversation touched on “proper” insurance which only covers large, unexpected losses and preferably is purchased individually and not through an employer. Over-insurance (that is, using insurance for routine, inexpensive care) causes excess testing and other excessive utilization, which of course contributes to out of control spending.  Lastly, he emphasizes the need for supply side solutions associated with charity care to address our nations indigent patient population.

How to induce or layer such change within our current system vexed with bureaucracies and vested interests, remains to be seen. But it is a challenge we should not shrink from in light of Medicare insolvency concerns and ever-growing healthcare demand that continues to eat up a larger percentage of our GDP.  At least we have greater clarity on what to avoid as we promote a more bottom-up approach to healthcare reform, thanks to Dr. Kurisko’s insights about the problems in the Canadian healthcare system.

Gayle recently talked with Leo Wisneiwski, founder of Health Cost Labs (www.healthcostlabs.com) about hospital price transparency and how this newly disclosed data will be a game changer for health care expenditures.  

Leo described how his experiences with fee schedules and billing data at an insurer lead him to found a company that cleans hospital price data and makes it usable for brokers, employers and patients.  When insurers change fee schedules, providers respond by billing the same procedure with different codes to maximize revenue.  Insurers claim they are controlling costs, but the data does not support this claim.  Leo says this lack of empathy for patients who cannot afford care drives him to make the data available so people can shop for value and hold insurance companies and providers accountable.

Health Cost Labs data is available for purchase by state and more hospitals are releasing their pricing data every week.  So far, many of the Health Cost Labs customers are brokers who want to help employer groups save on hospital expenditures.  

Leo talked about the new fiduciary requirements that go into effect in 2022 that require employers to act on this sort of price data.  And uninsured patients will have new protections in 2022 as bills too far in excess of the good faith estimate will be arbitrated.  

Since Leo has an actuarial background, Gayle wanted to know his view of whether actuaries are doing as much as they should to address dysfunctions in the healthcare system.  Leo believes most actuaries are entrenched in their bubble; they trend and risk adjust but they don’t embrace broad price transparency efforts.  He says there’s apathy about the system from middlemen, whether it’s actuaries or other leaders in managed care; if there’s always a buyer for my services, I don’t actually need to do anything about spending.  Gayle and Leo touched on the importance of bottom-up empowerment and mindset in improving the results we see in healthcare.  And Leo warned that he sees a day of reckoning coming for the high cost players.  It will be exciting to see what happens as more people use newly disclosed hospital price data in 2022. 

Greg recently completed a research report for the Society of Actuaries entitled “Uninsured Rate” Measurements and Health Policy Considerations, available at www.soa.org/resources/research-reports/2021/uninsured-rate-measurements/.  He became interested in the measurement of the uninsured rate because we don’t really know the impact of reforms on the uninsured rate, and there’s no agreed-upon definition of being uninsured despite the importance of lowering the rate of uninsurance; every significant reform from Medicare and Medicaid to the Affordable Care Act has had as a primary goal to increase the portion of Americans who are covered.  Unlike with many other data elements important for healthcare, there is no file of uninsured Americans.  This information must be obtained by survey.  Greg’s report explains the various sources of uninsured rates.  In this podcast episode we discuss the many layers of complexity to uninsured data.  There are definitional issues of what counts as coverage and what length of time without coverage constitutes being uninsured.  Additionally, surveys experienced considerable challenges gathering data after the pandemic started.  Many important questions that are highly relevant for health policy are beyond  the scope of the uninsured rates and the surveys that generate them.  Questions such as why the half of uninsured Americans who are eligible for free coverage have not signed up remain unanswered.  

The conversation touched on how changes implemented in the Trump and Biden administrations affected certain subsets of the uninsured and why higher income young people still find ACA Exchange plans unattractive.  Greg shared his view that at this point, it’s not about affordability, but rather, whether inflated premiums and more generous subsidies result in a good value for consumers.  Gayle also wonders whether the burden to taxpayers of more and more subsidies is too high.  

Finally, we discussed the role of actuaries; are we thinking broadly enough and doing enough to watch out for the interests of the public?  We agree that actuaries should be objective truth tellers and actuaries do have an obligation to the public; we agree that actuaries certainly should speak up about the things we know and only we know given our experience and training.  Greg shared that many actuaries have told him privately that they feel restrained and can’t speak out as freely as they’d like.  In today’s time of hyper-partisan hyper-polarization, actuaries are in good company in that regard; physicians, scientists, public health officials and many others also feel restrained from speaking their minds because others have been censored or canceled.  Perhaps openly discussing our concerns about healthcare reform in a format like this will play a small role in encouraging others to speak openly as well.

Dr. Wendy Molaska offers many points of view about Direct Primary Care.  In just over 35 minutes, we touch on all of the important aspects of DPC, examined through a variety of lenses including

·         Physician and patient perspectives in DPC and traditional primary care

·         Physicians employed by a big system vs practicing independently

·         Physician incentives in DPC vs in the “sick care” system

·         Copays and deductibles are barriers to primary care access; flat DPC fees remove the barrier 

·         Why “it feels so different” to spend time and energy figuring something out that directly benefits the patient vs spending the same time and energy to save the insurance company a few bucks

·         What DPC advocacy looks like in a Medical Society and in Academic Medicine

·         Scope of practice, transparency and frustration

·         Physician burnout and workforce shortages

·         Educating the public and the patient about DPC

·         Primary care in rural vs urban areas; doctors are returning to rural hometowns as small practices are sustainable in a DPC model 

·         Medicaid debit cards for DPC fees improve the health of high risk patients and avoid expensive emergency department and hospital care

Fritz Busch describes being smitten with DPC the first time he heard a DPC physician talking about the model. He found the model very appealing because it seemed like it would work, it would provide better care.  Fritz had always been bothered that so many physicians are burned out.  He was very pleased to learn how much physicians loved practicing in a DPC model, as there was finally something that’s going directly at our physician burnout problem.  Fritz wanted to study DPC, to see if he could prove that results are better in DPC.  He ultimately was involved in the Society of Actuaries’ study of Direct Primary Care (available here: https://www.soa.org/resources/research-reports/2020/direct-primary-care-eval-model/) and other DPC papers and consulting projects. 

Next we discussed the changes he’s seen in the last several years, in terms of the DPC model and the consulting work associated with it.  We discussed that self-insured employers have the flexibility to adopt DPC and that much of the growth of DPC is taking place in this market.  Fritz also noted that lines are blurring between corporate DPC and onsite clinics.

While DPC isn’t particularly actuarial (primary care is not insurable in a technical sense as costs are almost entirely knowable), DPC clinics seek consulting for a variety of reasons.  Some are looking to add services that, similar to primary care, have high frequency, knowable costs (such as physical therapy).  Others are looking at increasing the value they provide to their patients in terms of revenue per square foot of clinic space.  Modeling risk and risk sharing are other areas where DPCs may seek consulting services.  Fritz described a current project that involves both qualitative and quantitative analysis of the value of DPC.  The inclusion of qualitative methods recognizes that the better experience for employees is not fully captured in a financial analysis involving DPC fees, savings due to lower spending on primary and downstream care, and savings in patient cost sharing.

Finally we got into the biggest problem in the healthcare system.  Fritz gave a detailed and insightful answer involving distortions caused by 3rd party payment and too much money being thrown into the healthcare system by Medicare and Medicaid paying automatically (without competition). Given how our system is set up, we really can’t expect anything other than the very expensive system that we have.  Thanks for a great conversation, Fritz!

You don’t want to miss this wide ranging conversation with perhaps one of today’s foremost experts on healthcare systems.  Health actuary and retired Milliman Principal, Mark Litow spoke with Joyce and Gayle about how healthcare systems work, the main disconnects in the US system, and how reform efforts have led to the numerous problems we face today, including  poor doctor-patient relationships, unaffordability, generational inequity, workforce challenges, and long term unsustainability.  

Mark leads the Concerned Actuaries Group or CAG (www.concernedactuaries.org) and he went into detail about how CAG has modeled the US healthcare system.  The model focuses on six signals that together form a comprehensive view of the system: cost, coverage, access, health status, economic impacts, and long term sustainability.  The six signals are modeled across all markets, such as Medicare, large employer group, uninsured, and individual. The idea is to model each mutually exclusive population group based on the type of medical coverage they have, as incentives and behaviors will vary by these groups.  The model projects the results of a reform into the future and compares it to a continuation of today’s healthcare system.  As a powerful testament of the model’s predictive ability, Mark explained that it predicted that individual insurance premiums would increase 60% after the implementation of the Affordable Care Act.  Individual market premiums actually increased between 55 and 60%.  The CBO’s model, in contrast, predicted an increase of 10-13%.  

Our conversation touched on the proper role for insurance and the effects when subsidies are too low or too high; Mark mentioned work he did in South Africa, modeling the health care system and developing a new insurance plan that was successful until the political winds changed.  Finally Mark talked about the actuarial profession and how it has changed over his career.  He takes very seriously the obligation of actuaries to speak out if a social insurance program is poorly designed or will have significant negative unintended consequences.  He noted that regulatory filings were a small part of what Milliman actuaries did when he first worked there, but by the end of his career, filings comprised about 2/3 of the work. The political pressure on actuaries to soften or remove assumptions that lead to unfavorable projections about pending legislation and regulations has increased as well.  It is important for actuaries to hold true to our actuarial principles and our responsibility to the public.

We extend a big thanks to Mark for sharing a bit of his knowledge with us today.

Today’s guest was Troy Robert, who has multiple entrepreneurial ventures in the healthcare system related to physical therapy and staffing of allied health professionals.  Troy explained different models of delivering and paying for physical therapy.  He compares the incentives of fee-for-service and direct pay models, plus a new model that aims to change the way PT is accessed for large employer groups.  This new model uses a per member per month approach and has patients access PT quickly after an injury or problem so that assessment and treatment can begin right away.  This approach is in contrast to the typical approach that involves primary care sending the patient for images and referring to an orthopedist.  Troy explains how his approach minimizes the delay to the start of treatment and can lower the use of opioids and imaging to provide an outcome that is often superior for less spending as compared to the typical approach.  We are looking forward to seeing what happens as this new model takes off.

Troy talked about how PT fits into the healthcare system, including whether physical therapy is a catastrophic expense and how PTs and other allied health professionals were dramatically affected when the Medicare reimbursement approach was reworked in 1998.  This particular change led to the creation of his company, Quantum Health Professionals, Inc. 

Troy and Gayle wrapped up the conversation with a lively discussion of what’s wrong in the healthcare system, how we got here, and how we need to change our thinking if we hope to improve it so that it better serves everyone in a much simpler and less expensive way.