Health Costs for Employers - Methodology
COLLECTION INSTRUMENT
The data for this website was released in the Supplemental Report of the 2007 Health Insurance Market in New Hampshire dated December 19, 2008. The underlying collection instrument for the 2007 supplemental report can be found by clicking here.
REPORT METHODOLOGY
The full 2007 Supplemental Report of the 2007 Health Insurance Market in New Hampshire dated December 19, 2008, may be downloaded by clicking here.
The following DATA NOTES are from the 2007 Supplemental Report of the 2007 Health Insurance Market in New Hampshire dated December 19, 2008:
DATA NOTES
Supplemental Report data are submitted to the NHID by June 1 of each year for premium billed and claims with a date of service during the prior calendar year. The length of time after the incurred period is needed in order to adequately capture data on a "claims paid" basis, which may take several months for the provider to submit the claim, the carrier to process the claim, and the data to be loaded in reporting databases.
Upon receiving data from the carrier, the NHID analyzes the submission and provides a summary report back to the carrier. This quality assurance process takes place to confirm that what is submitted by the carrier is reasonable and without major errors that occasionally develop during a data submission process. No further auditing of the data takes place.
Many of the statistics contained herein are based on membership. Membership numbers are calculated averages based on member months. If a member was covered for twelve months that member is reported to the NHID with twelve member months and represents one complete member. If a member was only insured for half the year, six months are reported, and the membership value is 0.5. This method of averaging allows the NHID to provide comparable numbers of members, when in practice the actual number of members fluctuates throughout the year. Additionally, many individuals may be insured for only part of the year, due to moving in or out of state, changing employers, or becoming uninsured. The averaging mechanism avoids overestimating the number of persons insured by counting membership on a pro rated basis. Since members can be counted on a partial basis, summary totals may differ slightly due to rounding errors.
"Loss ratio" is the term that is used to assess what percentage of the premium is paid out for medical claims. Loss ratio is calculated using the data submitted in the Supplemental Report by dividing the total medical and pharmacy claims dollars by the total premium dollars. This calculation also takes place for self funded insurance using a premium equivalent.
Third party administrators (TPAs) calculate an earned premium equivalent based on the contribution rates established for the coverage being reported. These premium equivalents include all funds collected by the TPA from the account in relation to the TPA's administration of the group's health plan. The funds include provisions for claims, administration, stop-loss insurance, TPA's profit margins, commissions, wellness programs, network fees, and disease management programs.
A loss ratio of .85 means that 85 cents of every premium dollar is used to cover the cost of medical claims. The difference between .85 and 1.0 in this example (equal to 15 cents of every premium dollar) is the amount that covers carrier administrative costs and profit, but does not include all factors that affect carrier profitability.
Average premiums are provided in this report. These averages are calculated by the NHID on a per member basis. This allows comparability, but the average premiums may not reflect the actual premium paid by any particular enrollee. This is due to several factors related to the way premiums are calculated, including the employee/employer contributions and premium tiers, such as family, couple, and individual.
During the quality assurance process, data submitted by a carrier for a health insurance plan was inconsistent with other submissions. The explanation provided by the carrier was that the insurance was for a student health plan. Based on a comparison with another carrier that sells student insurance with a similar actuarial value, this fact did not explain the low costs. Therefore, the carrier's data was removed from all of the statistics and calculations in this report.
A second anomaly was discovered during the quality assurance process. There are separate submissions for Cigna HealthCare of New Hampshire and Connecticut General Life Insurance Company (CGLI), but these organizations are part of the same entity. The combined membership of the submissions was substantially less in 2007 than in 2006, and the explanation provided was that a restructuring of a major account moved the policyholder location out of NH. This account included about 75,000 members.
The loss of the Cigna/CGLI membership in the data means the sample of members we use to characterize the insurance marketplace in NH may be different. The differences may impact how the data compare between 2006 and 2007. Since this is a large account, comparisons are most meaningful when other policy types (non-group, small group) are compared between years, rather than the aggregated totals. The differences between the 2006 large group statistics and the 2007 large group statistics may, or may not be influenced by this change in membership. If the account had similar characteristics to other large accounts in NH, than there is minimal impact to our comparisons. If not, there will be differences in our comparisons simply due to the population bias of the samples.
Like any data collection tool, the Supplemental Reporting tool has limitations. These limitations are not unlike any that are to be expected with all survey data. Therefore, while the NHID believes this report accurately represents the health insurance marketplace in New Hampshire, we believe that the data include a degree of error that cannot be eliminated in this type of reporting process.