Merged Market Merged Market AnalysesAnalyses

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Table of ContentsTable of Contents Market Segments

Premium Setting

What does it mean to merge markets?

Market Comparisons

Merged Market Scenarios

Enrollment Projections

Merged Market Results

Conclusions

All analysis shown was done prior to PL90

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Market SegmentsMarket Segments Insurance carriers define market segments to assist them with

managing their business Sales & Marketing

Enrollment & Billing

Products & Premiums

Federal and State government define market segments to assist with regulation Maine Individual Market – People who purchase insurance on their own which will include

sole proprietors; Rating is regulated

Maine Small Group Market – Employer groups that have up to 50 employees; Rating is regulated

Maine Large Group Market – Employer groups that have more than 50 employees; Rating is not regulated

Large Group (51 to 100)

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Premium SettingPremium Setting

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Due to current Maine regulations, insurers set premiums separately for each market segment

Premiums are developed by analyzing data Demographics

Health Status

Use of Medical Services

Individual Market Guaranteed Issue states, where health underwriting not allowed, average premiums

are generally higher and the population generally is older and tend to use more medical services than other markets

States where health underwriting is allowed, average premiums are generally lower and the population is typically younger and healthier than other markets- however the premiums for the older and less healthy in these markets may be extremely high

What does it mean to What does it mean to merge markets?merge markets?

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Premiums are based on the combined populations of the merged markets

If market segments are not homogenous One market segment subsidize the other

Premiums increase for one segment

The healthier and younger segment

This segment provides the subsidy

Premiums decrease for the other segment

The sicker and older segment

This segment will receive the subsidy

One set of regulations will apply to the merged market – this will also cause disruption

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Maine Market Maine Market ComparisonComparison

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Maine Market Maine Market ComparisonComparison

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Market ComparisonMarket Comparison

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Merged Market Merged Market ScenariosScenarios

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Individual MarketSmall Group

MarketMerged Market

1

Small Group Market

Large Group 51 to 100 Market

Merged Market 2

Results will change based on when the merging occurs After CY 2014, markets will look different due to premium tax subsidies, Individual

Market will be larger Federal Health Reform allows states to merge these markets, it is not mandatory

Federal Health Reform requires this merging to take place in CY 2016 States have the option to merge prior to CY 2016

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Maine Enrollment Maine Enrollment Current & ProjectedCurrent & Projected

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Enrollment June 2010 CY 2019Individual Market (IND) 36,000 95,000 Small Group Market (SG) 96,000 91,000 Large Group (51 to 100) Market (LG) 22,000 22,000

Membership projections modeled by Dr. Gruber Modeling done prior to the passing of PL90 Individual Market grows considerably due to Federal Health Reform

(FHR): Individual Mandate and Premium Tax Subsidies Uninsured drop by 60K

Small Group Market shrinks a little Groups drop coverage due to premium increases due to FHR;

may be exacerbated by PL90 Large Group 51 to 100 - assumed flat growth

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Maine Individual + Small Maine Individual + Small GroupGroup

Merged MarketsMerged Markets

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Premium Change June 2010 CY 2019

Merge IND + SGIND -15% SG +7%

IND -9% SG +12%

Premium change due to merging Individual & Small Group Markets Individual Market premiums decrease: 9% to 15%Small Group Market premiums increase:7% to 12%Results independent of medical trends Modeling does not reflect PL90

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* Note that the modeling does not reflect the federal transition reinsurance program

Maine Small Group + Maine Small Group + Large Group (51 to Large Group (51 to

100)100)

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Premium Change June 2010 CY 2019

Merge SG + LGSG 0% LG 0%

SG -1% LG +5%

Premium change due to merging Small Group Market & Large Group (51 to 100)Small Group Market premiums decrease up to 1%Large Group (51 to 100) Market premiums increase up

to 5%Results independent of medical trends Modeling does not reflect PL90

* Note that the modeling does not reflect the federal transition reinsurance program

Large Group (51 to Large Group (51 to 100) Market100) Market

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In CY 2016, Large Group (51-100) Market will be merged with Small Group Market

Large Group Rating Formula will move from partial experience rating to community rating

There will be “winners and losers” from this change

Groups that tend to be lower utilizers of medical care may experience premium increases

Groups that tend to be higher utilizers of medical may experience premium decreases

Difficult to model – every carrier’s rating formula in this market is different

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ConclusionsConclusions

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Due to Federal Health Reform Uninsured drop by 60,000 and Individual Market grows

Merging Individual Market with Small Group:

Individual Market: Premiums decrease 9% to 15%

Small Group Market: Premiums increase 7% to 12%

Small Groups may drop coverage or move to self insured

Merging Small Group with Large Group (51 to 100) Small Group Market premiums decrease up to 1% Large Group (51 to 100) Market premiums increase up to

5% While premiums changes are minimal on average, the

Large Group (51 to 100) Market will experience premiums disruptions due to rating formula changes

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