The Financial Condition and Performance of CO-OP Plans

The liquidation of CoOportunity Health, one of 23 non-profit health insurers created by the Affordable Care Act (ACA) has heightened concerns about the financial condition of the other CO-OP plans. This brief summarizes key data from CO-OPs’ third quarter 2014 National Association of Insurance Commissioners (NAIC) financial reports to state insurance regulators. We review CO-OP funding, enrollment, underwriting results, and rates. The data indicate that CO-OPs varied widely in terms of enrollment, pricing, and underwriting results. Many CO-OPs, including those with relatively high 2014 premium rates, had very little enrollment; others gained substantial enrollment, generally in conjunction with relatively low rates. That CO-OPs would face formidable actuarial, operational and financial challenges, with a significant likelihood that some would not become financially viable, has been recognized from the program’s initial planning stages. CoOportunity Health’s insolvency highlights those challenges and the potential consequences of rapid growth in conjunction with unfavorable claims experience, despite protection provided by the risk adjustment, reinsurance, and risk corridor programs. The experience highlights the need for close monitoring and oversight of CO-OP pricing and enrollment growth going forward

nsolvency Experience, Risk-Based Capital, and Prompt Corrective Action in Property-Liability Insurance

In December 1992, the National Association of Insurance Commissioners (NAIC) adopted a life-health insurer risk-based capital (RBC) formula and model law that became effective with the 1993 annual statement filed in March 1994. In principle, well-designed RBC requirements can help achieve an efficient reduction in the expected costs of insolvencies. They can provide incentives for insurers to operate safely in cases where market incentives are weak due to government mandated guarantees of insurer obligations or asymmetries regarding solvency between insurers and buyers. RBC requirements also may facilitate or encourage prompt corrective action by solvency regulators by helping regulators to identify weak insurers and giving regulators legal authority to intervene when capital falls below specified levels. RBC requirements may force regulators to act in amore timely manner when confronted with external pressure to delay action. However, RBC capital requirements have a number ofpotential limitations. Unavoidable imperfections in any meaningful RBC system will likely distort some insurer decisions in undesirable and unintended ways. RBC requirements by themselves will do little or nothing to help regulators determine when an insurer s reported capital (surplus) is overstated due to understatement of liabilities or overstatement of assets. A well-designed RBC system should minimize costs associated with misclassification of insurers. The system should be able to identify a high proportion of troubled companies early enough to permit regulators to take prompt corrective action and should identify as troubled only a minimal proportion of financially sound insurers. This study analyzes data on solvent and insolvent property-liability insurers to determine whether modifications in the NAIC s RBC formula can improve its ability to predict firms that subsequently fail without substantially increasing the proportion of surviving insurers that are incorrectly predicted to fail. It uses logistic regression models to investigate whether changes in the weight for the major components in the RBC formula and incorporation of information on company size and organizational form improve the tradeoff between Type I error rates (the percentage of insurers that later failed that are incorrectly predicted not to fail) and the Type II error rates (the percentage of surviving insurers that are incorrectly predicted to fail). The data analyzed were for 1989-91 for firms that subsequently failed and for firms that survived through the first nine months of 1993. The authors make four main conclusions. First, less than half of the companies that later failed had RBC ratios within the proposed ranges for regulatory and company action. Second, total and component RBC ratios generally are significantly different for failed and surviving firms based on univariate tests. Third, estimation of multiple logistic regression models of insolvency risk indicated that allowing the weights of the RBC component to vary and including firm size and organizational form variables generally produce a material improvement in the tradeoff between sample Type I and Type II error rates. And, fourth,the RBC models are noticeably less successful in predicting large firm insolvencies than in predicting smaller insolvencies. Regarding the estimated weights in the logistic regression models, a major conclusion is the reserve component of the NAIC risk-based capital formula, which accounts for half of industry risk-based capital, has virtually no predictive power in any of the tests conducted. Given the high costs associated with large failures and the inferior performance of the models in predicting large insolvencies, a higher payoff in terms of reduced insolvency costs is likely to be achieved by developing models that perform better for large firms.

Stabilizing Individual Health Insurance Markets With Subsidized Reinsurance

Subsidized reinsurance represents a potentially important tool to help stabilize individual health insurance markets. This brief describes alternative forms of subsidized reinsurance and the mechanisms by which they spread risk and reduce premiums. It summarizes specific state initiatives and Congressional proposals that include subsidized reinsurance. It compares approaches to each other and to more direct subsidies of individual market enrollment. For a given amount of funding, a particular program’s efficacy will depend on how it affects insurers’ risk and the risk margins built into premiums, incentives for selecting or avoiding risks, incentives for coordinating and managing care, and the costs and complexity of administration. These effects warrant careful consideration by policymakers as they consider measures to achieve stability in the individual market in the long term

Health Insurance Rates and Rate Review

Health insurers participating in the new Marketplaces are filing rates for 2015 during the next few months. A few states have already released data on proposed rates. There is substantial economic, policy, and political interest in the magnitude of proposed rate changes. This brief provides background for understanding the economic drivers of proposed rates, state and federal rate review authority, the effects of rate changes on Marketplace enrollees and federal spending on premium credits, and the economic and political dynamics of the rate review and approval process

Documenting an Open Future in a Post-Policy World

This session continues the work of a 2019 survey that investigated library policies related to Open Access (OA). Specifically, this study sought to address the self-selection of participants by randomly selecting and directly contacting academic librarians at libraries within one of four different Carnegie classifications to request input on their library’s collection development policies and the existence of OA policies or informal practices related to library collections. The findings surface disparities in the documentation of OA collection practices among institution classifications and highlight concerns about both OA and policies in the collections strategies of academic libraries

Intersections of Open Access and Information Privilege in Higher Education and Beyond

Despite its capacity to reach readers irrespective of affiliation or geographic location, conversations about Open Access (OA) frequently center academic stakeholders in high-income countries. This presentation will examine opportunities for technical services librarians to explore with students some of the inequities of the scholarly communications landscape, including various approaches to and aspects of OA, and to consider the disparate levels of access available to individuals based on institutional affiliation. Because higher education settings afford students a high degree of information privilege, academic librarians face the challenge of teaching students to appreciate the value of information, acknowledge barriers to it, and identify and evaluate the freely available resources and content to which they will have access post-graduation. Although technical services and scholarly communication librarians tend to have fewer teaching responsibilities than those working in public services, our experiences with collection development, licensing, and resource description provide insights to share with students regarding information value and privilege. A case study on student projects which included the editing of Wikipedia entries highlights tensions between institutional privilege and open resources. Teaching students about the costs, processes, and value of information production empowers them to understand their privilege and responsibilities

Rate Regulation, Safety Incentives, and Loss Growth in Workers\u27 Compensation Insurance

We analyze the relationship between insurance rate regulation, inflationary cost surges, and incentives for loss control using state-level data on workers’ compensation insurance for 24 states during 1984–90. Regulators often responded to rapid loss growth during this period by denying rate increases or approving increases that were less than initially requested by insurers. We test whether rate suppression increased loss growth by distorting incentives for loss control. Our regressions indicate a positive and statistically reliable relationship between loss growth and lagged measures of regulatory price constraints, suggesting that rate regulation increased the frequency and/or severity of employee injuries

The Quality of Emergency Medical Services

Although Emergency Medical Services (EMS) is a crucial part of the health care system, there is relatively little research on the quality of those services. EMS agencies often measure their performance using criteria such as response time or total prehospital time. But larger scale studies that cross counties and providers are rare. This Issue Brief summarizes two studies that use comprehensive, longitudinal data from one state to assess the demographic, geographic, and professional factors that affect EMS performance

Technical Services Librarians and Outreach: Communicating Our Value to Engage Students in Critical Thinking about Information

At the University of Memphis (UM), two technical services librarians were inspired to present at an institutional conference with the goal of engaging students in building professional competencies and, specifically, enhancing their understanding of an increasingly complex information landscape in which they learn and work. This case study presents an example of technical services outreach outside of the library, shares methods used to engage students in thinking critically about the behind-the-scenes work entailed in resource management, and explains some of the ways in which technical services relates to the information students encounter as researchers

Price Cutting in Liability Insurance Markets

This article analyzes alleged underpricing of general liability insurance prior to the mid-1980s liability insurance crisis. The theoretical analysis considers whether moral hazard and/or heterogeneous information for forecasting claim costs can cause some firms to price too low and depress other firms\u27 prices. Cross-sectional analysis of insurer loss forecast revisions (which should be greater for firms with low prices caused by moral hazard or hetero- geneous information) and premium growth provides evidence consistent with low pricing due to moral hazard but not heterogeneous information. The evidence also implies that shifts in the loss distribution produced large industrywide forecast errors