The 2015 Actuaries Summit was held in Melbourne from 17-19 May 2015. In this article, Nicholas Stolk overviews seven sessions presented on private health insurance and related topics. All papers and presentations of the Summit proceedings are available at the Institute’s website.
Implications of the Changing Nature of Participation in Australian Health Insurance
Peter Grigaliunas & Andrew Gower
Peter and Andrew analysed the impacts of population age structure and participation rates on two key aspects of the Australian Private Health Insurance market: hospital benefits per insured life, and the proportion of benefits included within the age based risk equalisation pool.
Their paper puts forward a number of participation based scenarios and explores how risk rating, youth engagement with PHI, and existing trends might impact insurers’ pricing, product design and hospital contracting in the coming years.
Contemporary Issues in Private Health Insurance
The health practice committee (HPC) held its ninth discussion workshop of the same name at the Summit. Ben initially laid out some foundational background information before diving into his view of the issues faced by different stakeholders in the industry – consumers, insurers and actuaries.
Key issues explored included:
- Product downgrades
- Product complexity
- Insurer sustainability.
Ben also briefly touched on the achievements of Appointed Actuaries following their introduction in 2004. The presentation deck includes a detailed appendix featuring a number of interesting analyses of industry membership, rate increases and other financial trends.
The discussion featured many great questions for actuaries to consider, including how actuaries might find a solution to product complexity and what an alternative metric for assessing health costs for the industry might be?
Compulsory Health Insurance: Should Government still be the Health Insurer of the First Resort?
Jamie Reid, Collin Wang, Kris McCullough & Matthew Crane
Jamie and Matthew took on the highly topical debate around whether private health insurers should be allowed to fund primary care by providing a financial analysis of how much it might save the Commonwealth. They also provided a view on whether there might be sufficient scope and volume for potential efficiency savings to be worth further political consideration.
The paper considers a variety of scenarios including insurers taking on coverage for GP visits versus all primary care and examining the impact if the eligibility for either of these measures was income tested.
The authors found that there may be a ‘sweet spot’ for Government and insurers for primary care coverage of higher income Australians.
Counting the Benefits – Evaluation of Healthcare Programs
Bronwyn Hardy & Barry Leung
Bronwyn & Barry provided guidance for actuaries who need to perform disease management program evaluation. They comprehensively explored the issues to consider when designing a measurement system or evaluation criteria, including:
- Considerations for selecting a comparison group
- Determining an appropriate baseline, and
- How the choice of evaluation timeframe might impact the analysis.
Key messages included the need to clearly define the program’s objective and the importance of planning prior to program commencement to maximise the value of later evaluation.
A Day in the Life of a Health Actuary – 2025
Ignatius Li & Nicole Stransky
Ignatius and Nicole provided a view on the future of the health actuary by looking at the various drivers of change, how these changes impact the industry’s stakeholders, the skills needed by stakeholders to take advantage of these changes and subsequently, the opportunities for actuaries in providing those skills.
Some of the key drivers included:
- ‘The informed health consumer’
- Technology and wearables
- Better individualised and population data
- The ageing population.
The authors also put forward their own views of how the demands for various skills from actuaries and other practitioners will increase and found that expertise in understanding consumer behaviour and communication skills will assume greater importance over the next ten years.
The session concluded with an invitation for health actuaries to join the conversation about what they want from the next ten years and a challenge to the profession to respond to the coming changes.
Obesity and the Longevity Myth
Barry took a different perspective on the general view that the so called ‘obesity epidemic’ may dampen the long-term impacts of increasing life expectancy.
His paper demonstrates that conclusions based on an individual’s body mass index alone risks missing some of the more subtle health issues relevant to public policy debates and projections of mortality and morbidity.
A Collection of Risk Management Thoughts
Simone Leas & Greg Martin
Simone and Greg began by saying that they saw “clunkyness” in a number of areas of common ERM practice and wished to address this in three areas.
- They proposed a different perspective when considering the universe of risks faced by a business: distinguish by the risks’ particular characteristics (value adding versus non-value adding, systemic versus non-systemic), which they have found useful when discussing and defining Board risk appetites.
- Secondly, they outlined a bottom-up approach to operational risk measurement that they suggest is practical for day-to-day risk management activities, and provide a reconciliation between this and a top-down capital reserving approach (including the “dark risks” gap).
- They acknowledged that succinctly communicating an organisation’s risk profile can be challenging. The authors shared one of their reporting tools – a high level risk map “on a page” – that they found useful in communicating overall risk profiles to Boards and senior management.
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