What is vertical integration.

(7 points) (a) (2 points) Describe selection risks to the insurer for: (i) multi-choice employer group environment (ii) the individual market (b) (2 points) Describe antiselection models in the individual market. An employer offers three health plans A, B, and C to its employees. You are given: Monthly Plan Description Number of Relative Employer Employees Morbidity Premium Rate Contribution A High deductible HSA plan / 40 40% $400 $400 full network plan B Medium deductible / 35 100% $500 limited network plan $400 C Low deductible / 25 full network plan 250% $600 $400 (c) (2 points) Calculate the antiselection risk. Show your work. (d) (/ point) Propose employer contribution amounts to reduce the antiselection risk. Justify your answer.(9 points) You are an actuary for an HMO investigating ways to reduce plan premiums. You are considering Tiered Network Health Plans (TNHPs) as a tool to achieve this objective. (a) (/ point) Define TNHP. (b) (/ point) Describe the process of designing a TNHP. You are given historical data for Providers A, B. C, D, and E for the most recent calendar Year. A B C D E Rating Area 2 2 3 Total Utilization 4.800 3.600 1,200 4.800 3.600 Allowed Claims $960.000 $900.000 | $240,000 | $1,200.000 $900.000 Member Months 2,400 1.800 600 2.400 1.800 You are given: Providers B. D. and E have been designated as non-preferred providers. 50% of members utilizing non-preferred providers will shift to utilizing a preferred provider in their rating arca. Members currently pay 25% coinsurance. Under the proposed TNHP design, members will pay the following coinsurance: 0 25% for preferred providers 40% for non-preferred providers (c) (5 points) Calculate the savings resulting from implementing the TNHP. State your assumptions. Show your work. (d) (2 points) Critique the proposed TNHP design