Modeling the U.S. Healthcare System - A Conversation with Actuary Mark Litow

You don’t want to miss this wide-ranging conversation with perhaps one of today’s foremost experts on healthcare systems.  Health actuary and retired Milliman Principal Mark Litow spoke with Joyce and Gayle about how healthcare systems work, the main disconnects in the US system, and how reform efforts have led to the numerous problems we face today, including poor doctor-patient relationships, unaffordability, generational inequity, workforce challenges, and long term unsustainability.  

Mark leads the Concerned Actuaries Group or CAG (www.concernedactuaries.org), and he went into detail about how CAG has modeled the US healthcare system.  The model focuses on six signals that together form a comprehensive view of the system: cost, coverage, access, health status, economic impacts, and long-term sustainability.  The six signals are modeled across all markets, such as Medicare, large employer group, uninsured, and individual. The idea is to model each mutually exclusive population group based on the type of medical coverage they have, as incentives and behaviors will vary by these groups.  The model projects the results of a reform into the future and compares it to a continuation of today’s healthcare system.  As a powerful testament to the model’s predictive ability, Mark explains how it forecasted a 60% increase in individual insurance premiums after the implementation of the Affordable Care Act.  Individual market premiums actually increased between 55 and 60%.  The CBO’s model, in contrast, predicted an increase of 10-13%.  

Our conversation touched on the proper role of insurance and the effects when subsidies are too low or too high; Mark mentioned work he did in South Africa, modeling the healthcare system and developing a new insurance plan that was successful until the political winds changed.  Finally, Mark talked about the actuarial profession and how it has changed over his career.  He takes very seriously the obligation of actuaries to speak out if a social insurance program is poorly designed or will have significant negative unintended consequences.  He noted that regulatory filings were a small part of what Milliman actuaries did when he first worked there, but by the end of his career, filings comprised about 2/3 of the work. The political pressure on actuaries to soften or remove assumptions that lead to unfavorable projections about pending legislation and regulations has increased as well.  It is important for actuaries to hold true to our actuarial principles and our responsibility to the public.

We extend a big thanks to Mark for sharing a bit of his knowledge with us today.

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