Comparative Actuarial
Assessment Model

...holistic analysis to improve policy, business and consumer decision making

We can do better than this!

...a brief look at the case for rethinking how we make and evaluate decisions about regulating, financing and interacting with health care in America

When significant change occurs, those ready and able to understand what is happening and prepared to adapt inevitably improve their odds of success.

American health care, like nearly everything else in the world, is changing and will continue to change for decades to come. It has changed and will change because science and technology are changing the opportunities to prevent and treat illnesses.

It has changed and will change because the demographics of the populations

that require and/or can benefit from access to health care will change. And, it

has changed and will change because the costs of providing and paying for

health care change as the cost of care and the number of people needing that

care change.

It has changed and will also change because it is a governmentally regulated

system financially dependent upon federal and state tax dollars for nearly half

of its costs and politically sensitive to constituent dissatisfaction with the

affordability, accessibility and quality of the care it delivers.

Situation Assessment: Public dissatisfaction with the affordability, accessibility and quality of their health care has made the health care system a major, if not the major issue, in national and local elections for more than a decade and it is now clear it will play a major role in the up- coming 2020 campaigns.

The range and complexity of the public dissatisfaction and the degree to which it has emerged as a political issue suggests that we as providers, consumers and policy makers have not yet sufficiently or successfully understood or adapted to the changes already affecting the affordability, accessibility and quality of our health care.

As a result, the American healthcare system, as currently structured and financed, is neither financially sustainable nor physically capable of delivering consistent, quality health care equitably. It is not, therefore, politically viable, which suggests that further politically driven policy changes are inevitable. The question is whether or not the changes yet to come will yield better outcomes than those produced to date?

When appropriate and effective adaptation to change is essential, the integrity, relevance and completeness of the process utilized for addressing change and managing the adaptation become the most important determinants of success (and failure).

America’s health care goals are no secret. We want care that is more affordable, more accessible, more equitable, more financially sustainable and that delivers better outcomes. This national wish list emerges from the experience of millions and millions of citizens who have interacted with or tried to interact with America’s health care system over time and circumstances and concluded that the main problem with American health care is not a lack of quality, but rather a lack of access directly attributable to cost and a variety of demographic and geographic issues.

Frustrated consumer perception has shaped and been reinforced by the emergence of competing political storylines that have dominated election cycles for more than twenty years. It is a limiting discourse much too narrowly focused on the intersection of “cost” and “coverage.” Some in that intellectual box see expansion and improvement of “coverage” as the solution to both the lack of individual affordability and accessibility, while others see the escalating “costs” resulting from expanded “coverage” as damaging the economy and burdening future generations with unreasonable debt. All the folks in the box have good points to make for their position, but talking points, even good ones, are not solutions and so the debate and the frustration wears on while the risks and the human and financial costs continue to grow.

Situation Assessment: The current regulatory and oversight process has laudatory goals, but does not effectively engage the complexity and interactive phenomena of the health care system with the understanding and rigor required to actually achieve those goals. At the heart of this gap between aspiration and achievement is the fact that policy makers (and the public) do not have access to the broader analytics they need to make informed decisions and without that data the general public cannot effectively consider the merits of the changes being proposed.

The continued use of a flawed process, flaws the system that relies on that process.

The current simplistic portrayal of the problem as a partisan philosophical conflict between those who see more access as a moral imperative and those who think unreasonable costs are being allocated unfairly thrives in the current political environment. It also obscures the fact that the public and their elected officials cannot effectively address issues such as affordability, access and quality without acknowledging and engaging the totality and complexity of the health care system in their efforts to improve it.

At some level, we all know this is true. Health care did not become a major political issue in this country because things got better. Obviously, some things did improve, but consider the following examples of what might charitably be called unintended consequences of the well- intentioned current policy making process:

  • Between 2008 and 2016, Medicaid costs increased from $0.55 to $0.67 of every federal dollar going to states and local governments. The demand on state revenues increased as well and now claims about 20% of all state revenues collected. These increases affected state and local spending on other priorities including education and infrastructure. 

  • During roughly the same time period (i.e., 2008-2017), Enrollments in Medicare and Medicaid increased 43%, adding more than 40 million people to the two programs. The provider infrastructure did not grow at the same rate, which created access problems for certain segments of the population (e.g., people living in rural areas). This problem was compounded as costs grew by more than a half a trillion dollars and the federal government discounted (i.e., reduced) payments to providers, which led to fewer existing providers accepting enrollees in these two programs, especially Medicaid, thereby further reducing access for some populations (e.g., low-income populations in urban areas). 

  • In 2017, government health care programs spent $1.4 trillion dollars more than they brought in from premiums and other revenue sources. Approximately $240 billion of that deficit spending was added to the national debt, increasing the burden on future generations. The remaining $1.2 trillion deficit spending generated increases in premiums for the private sector large group and individual markets (i.e., cost-shifting). These increases, in turn, have led to major increases in out-of-pocket costs for individuals and families and contributed to the current widespread and spreading concerns about costs.

Situation Assessment: The examples above underscore the dangers of making policy decisions without grasping the totality and complexity of the American healthcare system. They also highlight the far-reaching and very personal damage and hardship to which insufficiently informed decision-making leads.

In this era of change, Einstein’s definition of insanity has emerged as one of the “go to” quotes because it so clearly makes the point that whether or not something works is an observable, measurable phenomenon. Even more important, it counsels that whatever process failed to produce the desired result is highly unlikely to lead to a different and better result without some modification in methodology.

We have reached a tipping point in American health care and would be well-advised to heed that wise counsel.

We can do better!

The Concerned Actuaries of the U.S. (CAUS) is developing a Computer Actuarial Assessment Model (CA2M) that can provide timely, relevant and powerful analytical ability to determine whether proposed changes will improve or harm America’s health care system.

CAUS is dedicated to enhancing public and policy maker ability to understand, evaluate and interact more effectively with decisions affecting the American healthcare system. The CA2M is a developmental tool intended to help policy makers and their constituents determine whether or not the changes being proposed might actually achieve their stated objectives and whether or not there might be unintended consequences attached to such changes. To that end, the model output highlights both the magnitude and duration of positive and negative consequences, and challenges advocates to address questions that experience tells us need to be asked. For example, had the CA2M been available in 2008 to provide such information, the following questions could have been raised (and possibly addressed) at that time, including:

  • Won't rising costs force the government to further discount payments? 

  • Won’t deeper discounts lead to cost-shifting to the private sector? And, won’t that in turn eventually lead to rising out-of-pocket expenses for consumers? 

  • Won’t increased urban demand for care result in shortages in rural areas? 

  • What happens in terms of costs and sustainability if population health status deteriorates at a faster rate? 

While a work-in-progress, CA2M provides a strong framework to facilitate much more responsible consideration of health policy. Using this model to illustrate the broader impact of a given policy proposal should lead directly to an expectation that the public dialog expand beyond talking points. 

The CA2M’s key features include:

  1. An analytical matrix designed to provide the most holistic assessment currently available of how proposed changes to the American healthcare system might affect the system and the people who depend upon it. The matrix includes:

    1. An “X” axis that recognizes key market signals we believe reflect the areas of major activities and outcomes currently operating in the American healthcare system, including cost, coverage, access, health status, the economy, and sustainability; 

    2. A “Y” axis that we believe recognizes all current service access platforms in the American healthcare system, including large group, small group, individual, Medicaid acute, Medicaid disabled, uninsured, Medicare and an “other” category; 

    3. A data base that contains detailed, reliable, accessible information and expert opinion on eleven critical variables that inform assessment of interactive impact in each of the 48 intersections identified in the matrix, including population factors, cost estimates, risk market factors, demographics and utilization, health status, market costs, benefits, availability of providers, revenues and expenditures, and GDP. 

  1. An output capacity designed to identify for policy makers, opinion leaders, the news media and the general public the ripple effect of proposed actions and provide these same audiences with a mechanism that helps them understand in which areas the proposed changes need more work. The CA2M can, for example, highlight interactive challenges and opportunities of a proposed change related to provider infrastructure; financial sustainability; patient accessibility; household affordability; general economic impact and others. 

  2. An experiential growth capacity that allows the model to adjust and accommodate to reflect additional and/or new information as it becomes available. For example, the model includes a variety of behavioral algorithms that will evolve as new and/or additional data about specific behaviors becomes available. 

Situation Assessment: The need for America’s public officials, policy makers and private sector leaders to engage more effectively with the totality and complexity of the American Healthcare system is apparent. Jumpstarting that engagement requires raising public awareness of the need for more information and developing the capacity to provide the additional, relevant information to inform the broader analysis and policy-making. The CAUS is working on both.

We must do better...NOW

Click on the picture to access the CA2M Video Link