{"title":"Collective risk assessment in Affordable Care Act markets: A Bayesian hierarchical model","authors":"Juan Ignacio de Oyarbide, Rui Paulo","doi":"10.2139/ssrn.3659528","DOIUrl":"https://doi.org/10.2139/ssrn.3659528","url":null,"abstract":"The changes that the Affordable Care Act introduced to the US health insurance market have entirely altered the traditional ratemaking process. Precisely, the creation of statewide community rating schemes and a guaranteed issue has facilitated insurance coverage to the high-risk population, leading to massive changes in risk pool compositions. The implementation of Risk Adjustment has neutralized some of the consequences of limiting premium variation in the market. However, setting appropriate rate levels has remained cumbersome due to the uncertainty about the statewide risk pool. Many insurers, who could not quantify the health risk associated with the statewide yearly enrollment, had to face unexpectedly high payments on risk equalization. Natsis (2019) stated that in this environment, the use of traditional univariate techniques to project statewide health care costs could be potentially misleading. This thesis proposes a Bayesian approach to reflect important sources of uncertainty over statewide actuarial estimates. The aggregate loss is modeled with a novel collective risk model based on a Generalized Beta Prime (GBP) distribution, accounting for long tail risks and changes in risk pool compositions. The GBP is presented with a mean-dispersion parametrization, which allows the introduction of a hierarchical prior specification over the state-specific means. This parameter structure, responsible of quantifying uncertainty and sharing information among states, is a cornerstone of the adopted collective risk model. Using the Commercial Health Care data extract published by the Society of Actuaries (2019), the model is applied on the Surgical and Transplant service category. The resulting heavy-tailed posteriors of the nationwide service means illustrate the high variation of inpatient medical costs. Moreover, the posteriors of the statewide aggregate claims remain highly right-skewed, reflecting the risk of facing sicker populations and high-cost treatments at individual claim level.","PeriodicalId":220305,"journal":{"name":"HEN: Risk-Adjustment & Case-Mix (Topic)","volume":"67 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-09-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131629517","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Risk and Contract Design in Public Private Partnerships.","authors":"K. Gopalan","doi":"10.2139/ssrn.2447519","DOIUrl":"https://doi.org/10.2139/ssrn.2447519","url":null,"abstract":"This paper examines the Risk Management and Contract Design aspects of Public Private Partnerships. Part I begins with the question: How is a public private partnership distinct from public-private interaction over history? From this question, it identifies risk allocation and risk sharing as a central feature of PPPs today. Part II attempts to see when PPPs to be used, as well as the potential advantages and disadvantages of PPPs. These lead us to the central part of the study. Part III examines Risk in four parts: a profile of risk in PPPs, risk categories, risk allocation principles & strategies, and some common mistakes. All risk management is manifested in the contract specifications. Part IV therefore focuses on Getting the Contract Right, from the structure as well as the key aspects of contract formulation. The paper draws on the PPP experience, drawn from the UK, Australia, Asia and India for illustrations. The paper ends with concluding remarks.","PeriodicalId":220305,"journal":{"name":"HEN: Risk-Adjustment & Case-Mix (Topic)","volume":"112 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124753153","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}