Method for health plan management
A method for managing health plans includes the use of theoretically derived mathematical models. The methods may be used in the analysis of health insurance products. The method may also assist in the selection of a particular health plan's benefit and contribution strategy. The analysis may further be used in the selection of a health plan's funding arrangement.
1. A computer-implemented method for comparing health insurance products comprising the steps of:
selecting a standard health insurance product having a standard premium and standard benefit design features;
selecting an alternative health insurance product having an actual premium and a plurality of benefit design features different from the standard product;
calculating an expected premium for the alternative product that is based on multiple categories of departures from the standard premium as a result of the accompanying departures in benefit design features;
wherein the calculation of the expected premium comprises two or three step that correspond to the categories of departure from the standard premium, the steps selected from the group consisting of:
(a) when comparing standard and alternative health insurance products having co-payment or coinsurance amounts, multiplying co-payment or coinsurance payment increments and decrements by typical utilization or cost levels, and then multiplying the foregoing result by a behavioral multiplier for a type of service,
(b) when comparing standard and alternative health insurance products having deductibles and out-of-pocket maxima, assessing those deductibles and out-of-pocket maxima using a statistical analysis of these benefit design features, and
(c) assigning a premium impact for a benefit design feature based on industry knowledge or research, or on customer preference;
calculating by a computer a value index for the alternative product, the value index being the ratio of the expected premium, as compared with the standard premium, to the actual premium of the alternative product;
using the value index to compare the alternative and standard health insurance products.
2. A method as described in claim 1 , further comprising selecting a plurality of alternative health insurance products, calculating a value index for each of the alternative health insurance products, and using each of the calculated value indices to compare each of the alternative and standard health insurance products.
3. A method as described in claim 1 , wherein the standard health insurance product is an incumbent health insurance product.
4. A method as described in claim 1 , wherein the value index calculation comprises accounting for differences in co-payment or coinsurance amounts between the alternative and standard products.
5. A method as described in claim 4 , wherein the calculation of the expected premium impact of co-payment or coinsurance differences comprises the steps of:
(a) multiplying co-payment or coinsurance payment increments and decrements by typical utilization or cost levels; and
(b) multiplying the result of step (a) by a behavioral multiplier for a type of service.
6. A method as described in claim 1 , wherein the value index calculation comprises an assessment of alternative and standard products deductibles and out-of-pocket maxima.
7. A method as described in claim 6 , wherein the assessment of deductibles and out-of-pocket maxima includes (a) generating theoretical, log normal claim distributions, (b) generating derivative out-of-pocket costs, and (c) modeling the deductibles and out-of-pocket maxima at a plurality of claim levels.
8. A method as described in claim 1 , wherein the value index calculation comprises assigning a discretionary premium impact value for a predetermined benefit difference between the alternative and standard products.
9. A method as described in claim 1 , wherein the value index is a single number.