Daily Insurance Report - October 18, 2023
DOL working on pension risk transfer rule review amid hot market
By John Hilton - While pension risk transfer (PRT) deals continue to break records, federal regulators are nearing a deadline for review and recommendations of Interpretative Bulletin 95-1. Read Full Article…
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Pension Risk Transfer and IB 95-1: An Overview: The Department of Labor, in 1995, established IB-95 to define fiduciary standards for selecting an annuity provider for pension risk transfers. The rule highlighted crucial factors such as the provider's investment portfolio, their size in relation to the annuity contract, and their financial health. The SECURE Act 2.0 of 2022 mandated the review of IB 95-1, making the revision of this rule particularly significant given the anticipated surge in the Pension Risk Transfer (PRT) market. Reports from Aon and MetLife in 2023 underline the vibrant activity in the PRT space. The involvement of investment-centric entities, especially private equity firms, in the PRT market has been flagged by regulators who are keen to ensure that retirement funds are safeguarded.
Stakeholder Feedback and Perspectives on IB 95-1: A hearing by the DOL's Employee Retirement Income Security Act Advisory Council in July 2023 sought feedback on potential changes to IB 95-1. Several stakeholders, including Athene (an annuity insurer with significant connections to the private equity world), weighed in on the issue. Athene defended the effectiveness of IB 95-1, arguing that it's serving its intended purpose and highlighting that no pensioners have faced benefits cuts due to insurer failures. However, they also acknowledged that the nature of underlying investments that guarantee future annuities has become riskier. Critics have raised concerns about certain investment strategies, such as Athene's engagement with structured credit investments and their Bermuda-based reinsurance agreements.
Emerging Concerns and Recommendations for an Updated IB 95: Given the digital age's challenges, Agilis, a consultancy in the PRT sector, emphasized that a revised IB 95-1 should mandate fiduciaries to take into account both reinsurance practices and the cybersecurity measures of the provider. Michael Clark from Agilis pressed for the explicit inclusion of cybersecurity in the standard, reflecting the evolution of threats in the digital era. Alongside cybersecurity, Linda K. Stone from the American Academy of Actuaries mentioned the importance of administration factors such as communication with plan participants, which becomes particularly vital when pensions are transferred in a PRT deal.
Medicare shoppers often face a barrage of unsolicited calls and aggressive ads
By Leslie Walker and Dan Gorenstein - One minute last December Leslie Montgomery was a medieval warlord pillaging a nearby kingdom. The next she was a retiree drowning in a flood of confusing Medicare sales calls. Read Full Article…
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Rise in Deceptive Medicare Marketing: Seniors, especially the vulnerable ones like Montgomery, are increasingly being targeted with misleading online ads and unsolicited calls offering information on private Medicare plans. Many seniors are tempted to click on these ads hoping for financial assistance, but end up being overwhelmed with health insurance offers they never requested. In response to the surge in complaints and a report by Senate Democrats, the Biden administration introduced new regulations to combat such deceptive marketing tactics.
Challenges of Open Enrollment Period: Medicare's annual open enrollment period, running from Oct. 15 to Dec. 7, provides an opportunity for seniors to choose a new Medicare plan. However, many find this process daunting and challenging. The plethora of options, combined with information that is often incomplete or even fraudulent, makes Medicare shopping a perplexing task. Despite the bombardment of ads, especially leaning towards Medicare Advantage, many seniors feel they are not adequately informed about their choices. Research indicates that the choices made during this period can have significant implications on the health and financial wellbeing of the beneficiaries.
Unreliable Sources of Advice: Insurance brokers and agents, though a primary source of guidance for older adults during the enrollment process, might not always provide impartial or complete information. Their compensation from private insurers can influence the plans they recommend. Brokers aren't legally obligated to inform clients about all available options. This misalignment can especially affect low-income seniors, as they are often directed towards Medicare Advantage plans, which might not always be in their best interest. As a result, there's a growing demand for neutral, trusted resources to assist seniors in making informed Medicare choices.
Panel weighs possible changes for WA Cares LTCi plan
By Rayne Morgan - The Long-Term Services and Supports Trust Commission is compiling a report of recommended changes to the WA Cares Fund, Washington state’s new public long-term care insurance benefit plan that has come under criticism for its lack of portability, among other concerns. Read Full Article…
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Introduction and Background: The WA Cares Fund, officially launched on July 1, 2023, is a first-of-its-kind public long-term care benefit in the state of Washington. Approximately three million Washingtonians contribute to this mandatory benefit program. Introduced in 2019 and passing in 2022, the program aims to offer affordable long-term care options for Washington residents.
Controversies and Criticisms: The program has faced criticism due to the issue of portability. Before the launch, officials were already aware and were actively seeking solutions to this "portability problem". Conservative opposition, including from figures like Ninth District Sen. Mark Schoesler and policy analyst Elizabeth Hovde, argue against the state-mandated nature of the program. Their concerns revolve around the program being non-optional, the perpetual nature of contributions, and questioning the sufficiency of the benefit amount. Schoesler likened the program to “mandatory mediocrity”, stressing the need for portability and optionality.
Addressing the Long-Term Care Need: National statistics indicate a rising need for accessible and affordable long-term care, with an estimated 70% of seniors in states like Washington and California unable to afford long-term care. The WA Cares Fund was established to address this growing concern and is supported by a mandatory payroll tax of 0.58% that continues until retirement or leaving the workforce. The benefit will be accessible starting July 1, 2026, with officials estimating that 25,000 to 50,000 people will initially receive payments, and about 100,000 new beneficiaries accessing benefits each subsequent year.
Feds rein in use of predictive software that limits care for medicare advantage patients
By Susan Jaffe - Judith Sullivan was recovering from major surgery at a Connecticut nursing home in March when she got surprising news from her Medicare Advantage plan: It would no longer pay for her care because she was well enough to go home. Read Full Article…
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Use of Algorithmic Decision-making Tools in Healthcare Coverage: UnitedHealthcare, the nation's largest health insurance company, uses naviHealth's "nH Predict" tool, a proprietary system that employs algorithms to sift through vast amounts of medical data. By comparing patients with similar diagnoses and characteristics, it predicts the care an individual might need. Many patients, providers, and advocates have raised concerns about the tool's accuracy. In several instances, it has prematurely predicted discharge dates, which align with the moment insurance companies stop coverage, leaving patients vulnerable and without necessary care.
Concerns Over Premature Discharge and Coverage Denials: Multiple patients under Medicare Advantage plans operated by private insurance companies have experienced abrupt coverage cutoffs, which often contradict the medical advice of their care providers. For instance, Sullivan, despite her inability to walk or manage stairs and a colostomy bag, had her nursing home coverage halted prematurely by UnitedHealthcare. Another example is Ken Drost, whose coverage at a Wisconsin nursing home was attempted to be cut after the exact number of days predicted by naviHealth. Such denials of extended care coverage result in significant out-of-pocket expenses for patients or put them at risk if they are sent home too early. Additionally, the coverage denial notices seem to lack detailed, patient-specific reasons for the denials.
Upcoming Changes in the Use of Predictive Technology in Healthcare Decisions: The federal government is stepping in to address these concerns. Starting next year, the Centers for Medicare & Medicaid Services (CMS) will impose restrictions on how Medicare Advantage plans use predictive tech tools for coverage decisions. This will ensure that decisions are based on individual circumstances, rather than purely on algorithmic outputs. New rules also demand that denial of coverage must involve review by a qualified health professional with expertise relevant to the service in question. Despite these changes, there are concerns about the enforcement of these rules, especially since specific penalties for violations aren't mentioned. However, CMS has indicated they will be conducting audits to ensure compliance.
Serotonin levels are depleted in long Covid patients, study says, pointing to a potential cause for ‘brain fog’
By Elizabeth Cooney - If you’ve been following the mystery of long Covid since it emerged in 2020, you’ll recall interferons and serotonin have been clues from the start as combatants in the body’s prolonged battles against the virus. Theories about why symptoms persist long after the acute infection has cleared often point to two suspects: viral reservoirs where SARS-CoV-2 lingers and inflammation sparked by the infection that doesn’t subside. Read Full Article…
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Serotonin and Neurocognitive Difficulties in Long Covid: Recent research from the University of Pennsylvania reveals that long Covid can deplete peripheral serotonin, which is present both in our bodies and the brain. This depletion may impair memory and other essential brain functions. Benjamin Abramoff, a study co-author, suggests that these findings provide insights into the diverse symptoms long Covid patients experience, pointing to potential underlying causes.
Effects Beyond Brain Function: The diminished serotonin levels are not exclusive to those suffering from neurocognitive effects. Abramoff mentions that these reductions in serotonin are also observed in individuals with pulmonary and cardiovascular dysfunctions, suggesting a universal phenomenon. The study finds a connection between these low serotonin levels and excessive blood clotting, autonomic dysfunction, and a weakened vagus nerve signaling – the gut-brain link which might be responsible for the cognitive issues characteristic of long Covid.
Research Methodology and Further Implications: The research is based on analyzing blood metabolites, comparing long Covid patients with those who had a full recovery and utilizing animal models to simulate infection and viral persistence. One significant observation was that serotonin levels were significantly lower in long Covid patients, possibly due to heightened interferon levels. Some of these patients even showed traces of the virus in their stool samples, hinting at reservoirs in their gastrointestinal tracts. Elevated interferon levels, a protein produced by the immune system, can lead to inflammation, which in turn reduces levels of the serotonin precursor, tryptophan. The study also emphasized the significant role of serotonin not only in the brain, where it's linked with conditions like anxiety and depression, but also throughout the body, influencing blood clotting, gastrointestinal tract functions, and the central nervous system.
ChatGPT for HR: Learn it ‘now, now, now’ or risk being replaced
By Jen Colletta - When OpenAI released its ChatGPT solution last fall, it took just five days to reach 1 million users—driving a hype that experts say is unmatched by any piece of technology. Read Full Article…
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Rapid Adoption and Real-world Efficiency of ChatGPT: OpenAI's ChatGPT reached 1 million users in just five days after its release, indicating the significant interest in generative AI technologies. A significant number of Fortune 500 companies (80%) have already integrated ChatGPT into their operations. Boston Consulting Group estimated a potential 30% increase in efficiency when companies use ChatGPT for HR tasks. Research also showed consultants using ChatGPT could complete tasks faster, more efficiently, and with improved quality.
Engaging with ChatGPT and Recognizing its Value: Johannes Sundlo emphasizes the need for a conversational approach when interacting with ChatGPT. He suggests treating the AI as a dialogue partner, continually providing it feedback for the best results. While human colleagues offer valuable insights, ChatGPT provides a unique advantage in terms of availability and efficiency.
Embracing ChatGPT in the HR Landscape: As the landscape of HR and technology evolves, HR professionals must adapt to stay relevant. Sundlo urges the HR community to be proactive in engaging with generative AI tools like ChatGPT. He provides a step-by-step approach for HR professionals to familiarize themselves with the technology, collaborate, and devise a strategic plan to harness its full potential for business success. The overarching message is clear: Start now to prepare for the future.
To be seen as strategic, HR must laser-focus on outcomes
By Stacy Harris - It’s that time of year. For the last several weeks, my team and I have been diligently crunching the numbers from our 2022-2023 HR Systems Survey. This year, almost 6,000 HR professionals participated, the largest response in the survey’s 26 years—so we’re practically swimming in data. Read Full Article…
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Historical Evolution of HR Metrics & Perception: The importance of HR has evolved over the years with a notable shift from a transactional focus to an outcome-based focus, revealing its value to businesses and improving workplaces. The origin of HR metrics can be traced back to Lexy Martin's HR Systems Survey, which initially connected HR technology investments to financial performance. By 2014, a shift was evident with the emergence of quantitative HR organizations emphasizing data-driven decisions, leading to a 79% higher return on equity compared to their non-quantitative counterparts. Surveys from 2015 onwards added new categories, emphasizing different organizational focuses like data-driven, talent-driven, and top performers, revealing varying strategic perceptions among them.
State of Strategic HR in the Modern World: Despite the emphasis on HR having a strategic position in businesses, data from 2018 to 2022 showed stagnant results with only 44-45% of HR organizations being perceived as strategic partners. In 2023, the "55 by 25" campaign was introduced with the aim to aid 55% of HR organizations in achieving a strategic perception. The key focus lies in monitoring and measuring outcomes, necessitating data-driven conversations between HR leaders and business owners. A call to action for HR organizations emphasizes customized dashboards that not only provide data but also narrate the stories behind the numbers. This approach ensures that the impact of HR actions on business outcomes is recognized and valued.
The Big Reveal at the HR Tech Conference: At the upcoming HR Tech Conference, the presenter will be sharing the latest customer insights on various HR applications and vendors, delving into topics like customer satisfaction, implementation success, and future plans. The presentation will also cover the performance of different implementation models and provide insights into the application of AI in the HR sector. The presenter emphasizes the significance of understanding trends in the HR profession. With inputs from nearly 6,000 HR professionals, it's crucial to listen and learn from their shared experiences and feedback to build a more insightful and data-driven HR community.
FDA Forms New Digital Health Advisory Committee to Cover Growing Role of Tech
By Frank Vinluan - From time to time, the FDA convenes an outside group of experts to weigh in on an experimental drug or medical device, or to offer insight on a scientific matter that raises questions. The FDA has 49 committees and panels oriented around various therapeutic areas and modalities. As regulatory submissions increasingly include digital components, the agency wants to ensure it is adequately informed about these technologies. It’s adding a digital health advisory committee charged with providing that perspective. Read Full Article…
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Scope and Composition: The FDA is setting up a new advisory committee by 2024 to focus on emerging technologies like AI, machine learning, AR, VR, digital therapeutics, and more. It will be comprised of nine core voting members, including the chair, serving up to four-year terms. Depending on the topic of the meeting, temporary members may be selected. The committee will not only cover technology but also aspects like decentralized clinical trials, patient-generated data, and cybersecurity. The FDA emphasizes the need for a diverse range of technical and scientific expertise to cater to a broad spectrum of the population.
Objective and Vision: Jeff Shuren, the director of the FDA’s Center for Devices and Radiological Health, highlighted the agency's commitment to improving health equity across different environments - from homes to urban and rural settings. He believes digital health technologies are pivotal in realizing this transformation. The overarching vision is to harness advancements in digital health in a manner that ensures patient safety and promotes innovation.
Operational Details and Participation: As a standard for all its committees, the FDA requires members to be experts capable of analyzing intricate scientific data, understanding its relevance to public health, and assessing the safety and effectiveness of products. Most members will be designated as “special government employees”, receiving compensation for their participation. Despite the allowance for travel expenses, the trend seems to be leaning towards virtual meetings, a practice observed during the pandemic. Those interested in joining the committee or putting forth nominations can do so electronically or via mail, with a nomination deadline set for Dec. 11.
Long-term mortality trends: Challenges for life insurers
By John Bowers - A steady decline in mortality rates since the 19th century has brought about a long-term rise in life expectancy for both men and women, but progress is uneven and, as recent history tells us, uncertain. Read Full Article…
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Impact of the Pandemic on Life Insurance Mortality and Longevity Trends: Life insurance forecasting combines historic data with projections of medical and technological advancements. The COVID-19 pandemic has caused a deceleration in life expectancy improvements, leading to increased uncertainty for life insurance and annuity providers. U.S. life insurance companies observed a 37.9% hike in paid death claims in 2020-2021 compared to the prior eight years, mainly due to COVID-19, unavailability of medical care, and societal issues like substance abuse.
Mortality Trends Post-Pandemic in the U.S. and the UK: While U.S. life expectancy decreased by almost two years, a record-setting premium growth from 2019 to 2021 affected life insurers' earnings more significantly. Deaths among younger age groups, with fewer premium reserves, posed a larger impact on earnings. In the UK, mortality data reveals continued excess mortality into the fifth quarter of 2023. The Institute and Faculty of Actuaries' Mortality Projections Model for 2022 showed reduced life expectancies at age 65 by seven and six months for males and females, respectively. Anomalies in mortality rates during 2020-2022 are comparable to significant historical events like World War II.
Academic Research on Life Expectancy Post-Pandemic: Academic studies are increasingly focusing on the shifts in life expectancy following the pandemic. The October 2022 study titled "Life Expectancy Changes Since COVID-19" highlighted global life expectancy losses, with marked differences between Western Europe, Eastern Europe, and the U.S. A 2023 study in the JAMA Health Forum indicated post-COVID-19 cardiovascular and pulmonary complications lasting up to a year. The phenomenon of long COVID-19 remains a challenge for insurers due to its diverse, lasting health conditions and lack of diagnostic tests. Insurers are adapting by revising mortality assumptions and increasing stress-testing scenarios, preparing for potential future shock events.