Why Modeling Matters
Plan design changes that seem straightforward can have unexpected financial consequences. A deductible increase that appears to save $200,000 may actually save only $100,000 after accounting for the behavioral response (employees delaying care, then incurring higher costs later). Actuarial modeling projects the true financial impact of plan design changes.
Modeling Inputs
- Current utilization: How many claims, at what cost, for each service category?
- Cost-sharing elasticity: How much will utilization change in response to the cost-sharing change?
- Behavioral response: Will employees delay care, use alternatives, or change providers?
- Adverse selection: Will the change cause sicker employees to choose a different plan?
- Stop-loss impact: Will the change affect stop-loss attachment points or premiums?
Working with Actuaries
Pro Tip
Most carriers and TPAs will provide actuarial modeling for proposed plan design changes at no additional cost. Request modeling for any change that affects cost-sharing by more than $500 per member per year. The modeling should include both the direct cost impact and the behavioral response — not just the mechanical savings from higher cost-sharing.