Transcript IP-31-Philbrook

Canadian
Institute
of
Actuaries
L’Institut
canadien
des
actuaires
2009 General Meeting ● Assemblée générale 2009
Ottawa, Ontario ● Ottawa (Ontario)
Session: Impact of the Recession on Health and Dental Experience
Speakers: Charlie Philbrook, Ken Fraser
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Recession and Medical/Dental
Results
•
Data Sources
–
Fraser Group
•
•
–
Quick Profitability Survey
Sources of Profit Survey
Statistics Canada
•
•
Gross Domestic Product
Unemployment Rate
Quick Profitability Survey
•
Survey of Group carriers
Data from 1992 to 2008
•
A simple question?
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•
•
Were your results satisfactory in Health?
–
Yes/No
•
2008 data from 17 companies, 91% market share
Sources of Profit Survey
•
Survey of Group carriers
Data from 1996 to 2008
•
Profit as Percent of Revenue
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•
•
2008 data from 12 companies, 81% market share
14%
40000
12%
35000
10%
Economic Indicators
30000
GDP per capita
8%
25000
Unemployment Rate
6%
20000
2006
2004
2002
2000
2%
1998
10000
1996
4%
1994
15000
1992
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45000
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Health Satisfactory
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Industry
Consolidation
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Total Industry Profit vs
Number "Satisfactory"
Total Profits
Number OK
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
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Health Not Satisfactory
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
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100%
12%
90%
10%
80%
70%
8%
60%
50%
6%
40%
4%
30%
20%
2%
10%
0%
0%
1992 1994 1996 1998 2000 2002 2004 2006 2008
Health Not
OK
unemploy
ment
2008
2006
2004
2002
2000
1998
1996
1994
1992
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100%
5%
90%
80%
4%
70%
3%
60%
50%
2%
40%
30%
1%
20%
0%
10%
0%
-1%
Health OK
change in
GDP
unemployment
Health Not OK
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
Negative
Posistive
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Direction of Movement
unemployment prior year
Health Not OK
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Negative
Posistive
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Direction of Movement (lagged)
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Conclusion
•
No obvious relationship of
Medical/Dental results to macro
economic
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•
But we all believe there is one.
•
Why can’t we see it?
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In summary
•
Our historical data does not show a causal
relationship between macro economic
measures and the broad direction of
medical/dental financial results.
•
Internal industry factors, such as
consolidation or new pharma products,
appear to have a much stronger influence.
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In summary
•
However, there is other evidence linking
short term changes in economic activity to
adverse medical/dental results.
Sources
– Quick Profitability Survey
• Fraser Group
– Sources of Profit Survey
• Fraser Group
– Statistics Canada. Labour Force Historical Review 2007
(Table Cd1T46an). Ottawa,
• Statistics Canada, 2008 (Cat. No. 71F0004XCB).
– Real Gross Domestic Product (GDP) per capita, Canada,
1981-2007
• HRSDC calculations based on 1) Statistics Canada. Gross Domestic
Product (GDP), expenditure-based, provincial economic accounts,
annual (CANSIM Table 384-0002). Ottawa: Statistics Canada, 2008;
and 2) Statistics Canada. Estimates of population
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One Company’s Experience
• Impact of Recession on Dental
Claims
• Impact of Recession on Health
Claims
• Digging Deeper
• Plan Sponsor Reactions
• Fraud in a Recession
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Question
• Would layoffs, or even the fear of
layoffs, create an environment where
plan members & spouses/dependents
increased their use of group benefits?
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“Use it before you lose it”
The Globe and Mail
Feb 9, 2009
• “Job seem precarious these days? Quick! Scramble to the
dentist, cram in that last massage and stock up on
prescriptions while you still can. Canadian eyeglass
companies, masseuses and dentists are reporting a bump in
traffic as more people get pink slips, anticipate layoffs or
calculate that their employers will soon trim group benefit
plans.”
• “Some are getting two pairs, three pairs ... they're getting as
much as their coverage will allow. They're using it before they
lose it.” VP Operations, Hakim Optical
Contact Centre Inquiries
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The leading indicator?
June
Impact to 12-mth
rolling avg
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Dental
• Claim patterns
• Trend
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More Frequent Claims
Dental
Increase
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No Change in Claim Size
Dental
Dental Trend is High
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Year-over-Year Trend
Sep 2008
Jan 2008
Sep 2009
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Health
• Claim patterns
• Trend
• Health sub-categories
More Frequent Claims
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Non-Drug Health
Increase
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Smaller Claims?
Non-Drug Health
Non-Drug Health Trend
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Year-over-Year Trend
Sep 2008
Jan 2008
Sep 2009
All Health Trend
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Year-over-Year Trend
Sep 2008
Jan 2008
Sep 2009
Vision Trend
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Year-over-Year Trend
Sep 2008
Jan 2008
Sep 2009
Drug Trend
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Year-over-Year Trend
Sep 2008
Jan 2008
Sep 2009
Hospital Trend
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Year-over-Year Trend
Sep 2008
Jan 2008
Sep 2009
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Digging Deeper
• Average age
• Loss of Co-ordination of Benefits
(COB)
• Acceleration of benefits
• Benefit maximums
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Average Age
• In our <25 life segment, average age has
increased from 44.98 in June 2008 to 45.75 in
June 2009, a 0.76% increase
• Statistics Canada data suggests the average age
of the working population (ages 20-65) is
currently increasing 0.14% per year
• We typically see 0.10%-0.20% on our block
• 5% of these groups had an increase of 5+ years
Rate Impacts
LTD
Life
Drug
+1 avg age
+6%
+10%
+2%
+5 avg age
+35%
+50%
+9%
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Loss of COB
Sep 2008
Sep 2007
Oct 2009
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Loss of COB
Sep 2008
Sep 2007
Oct 2009
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Other Contributing Factors
•
•
Acceleration of benefits
– People are going for procedures earlier in their plan years
– Trend could revert back to normal, or even reverse, if this is
the only factor influencing the higher volumes
– “People tend to push forward timelines…those who were
putting off going back for a recall at their dentist or going to
their chiropractor, for example, suddenly schedule them all
in.”1
Benefit maximums
– As maximums are hit, could we see negative year-over-year
trend?
– Drugs don’t have maximums
1 – “Use it or lose it”, The Globe and Mail, Feb 9, 2009
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Plan Sponsor Reactions
• More groups going to market
– Both clients & brokers are initiating
• Plan amendments
– 10%-15% increase in amendment
activity
•
•
•
•
Higher coinsurance
Higher deductibles
Removal of Dental
Reduction to termination ages
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Fraud in a Recession
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Fraud in a Recession
Opportunity
Pressure
Rationalization
• millions of
transactions
• easy to duplicate
receipts
• no fear of
consequence
• not aware of
detection measures
• already tried small
without getting caught
• sophisticated
schemes reduce the
risk of getting caught
• job loss notices
• fear of job loss
• reduction in income
• investment losses
• providers are trying
to make-up for a
reduction in noninsured customer
volume
• everyone does it
• not my fault the
economy is bad, so
I’ll recover my losses
thru fraud
• victimless crime
• just protecting my
family
• entitlement
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Fraud in a Recession
• No noticeable increase in total case
counts
• Higher cases referred for criminal
charges
Year
Cases referred for criminal charges
2006
10
2007
6
2008
6
2009 (ytd)
21
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Questions?