Trends in Premiums in the Small Group and Individual Insurance Markets, 2008-2011. Weighting

11/06/2012

Given the method by which the sample was ultimately obtained, probabilities of selection are not available. However, information upon which to derive survey weights appropriately representing each filing’s relative size is available from the 2010 NAIC (number of member-months by carrier), 2010 MEPS-IC (estimated enrollment distribution by state by product for the small group market), and, in some cases, carrier filings (number of reported members). The individual and conversion markets were combined for weight calculation and are referred to in this discussion as the “individual market”. The final weights represent the contribution to the estimates for each filing.

The weighting is carried out in a multi-step process. The first six steps are carried out at the state by market by year level. The last three steps are carried out at the market by year level. The weighting steps are described following the listing of steps and are numerically highlighted in Tables 6 and 7.

  1. Initial carrier weights (to reflect the carrier’s relative contribution to the estimates);
  2. Within-carrier filing adjustments (to adjust for multiple filings by a carrier);
  3. State-level product adjustments (small group market only) (to adjust for product enrollment distributions);
  4. Within-carrier enrollment adjustments (to adjust for the relative size of each filing);
  5. Weight control adjustments (to control the weights to sum to one within a state-year);
  6. Final state-level weights (for use in deriving state-level estimates);
  7. National-level adjustments (to adjust for the relative size of each state);
  8. National-level single-filer adjustments (to control the influence of single-filers within a state);
  9. Final national-level weights (for use in deriving state-level estimates).

Initial Carrier Weights: The source for the initial carrier weights is the 2010 NAIC. Information on member-months from NAIC was used to assign initial carrier weights to reflect the relative contribution to the estimates by carrier within strata defined by market (individual, small group), year, and state. Initial carrier weights are defined as:

Formula_1: Initial Carrier Weights

where

MTYSi = number of member-months reported from the 2010 NAIC for sample carrier i reporting in year Y from market type T in state S

Within-Carrier Filing Adjustments: As each carrier may have multiple filings within a market type/year/state, the initial carrier weight must be adjusted to reflect the number of filings within each carrier so as not to over-represent carriers with multiple filings.21 The within-carrier filing adjustment is defined as:

Formula_2: Within-Carrier Filing Adjustments

where

nTYSi = number of filings for carrier i from market type T for year Y in state S

State-Level Product Adjustments (small group market only): For the small group market, an adjustment to the survey weights is made so that distributions of the resulting survey weights reflect estimated enrollment distributions from MEPS-IC by state and product. (This information is not available for the individual market.) The sum of the within-carrier filing adjusted weights by product type is adjusted to reflect the MEPS-IC distributions. The product adjustment is defined as:

Formula_3: State-Level Product Adjustments

where the sum in the first term of the denominator is across all filings for product type P for which small group filings G22 were obtained for year Y from state S, and the sum in the second term is across all filings for which small group filings were obtained for year Y from state S. This latter term is used to scale the first term to sum to 1.0.

Formula_4estimated enrollment distribution of the small group market for product type P (relative to product types for which filings were obtained in year Y) within state S from the 2010 MEPS-IC data; f refers to a filing obtained from sample carrier i reporting in year Y from market type G (see footnote 21, infra) in state S

For example, from Table 6 ID=14, the numerator=0.636, the first part of the denominator is the sum of filing adjusted weights for P=Indemnity (0.963690), and the second part of the denominator is the sum of all filing adjusted weights (1.0). The formula then is 0.636 / (0.963690 / 1) = 0.649659, which is Column I in Table 6.

Within-Carrier Enrollment Adjustments: The survey weights are further adjusted to reflect the relative size (if known) of each filing for a carrier. Each filing contained information on either the number of covered members, the number of contracts, both, or neither. Using filings with both the number of covered members and the number of contracts, an estimate of the number of covered members was imputed for those filings with only the number of contracts. The within-carrier product adjustment is defined as:

Formula_5: Within-Carrier Enrollment Adjustments

where

ETYSPif = number of members reported on filing f from individual carrier i for product P from market type T for year Y in state S

nTYSPi = number of filings for carrier i for product P from market type T for year Y in state S

State-Level Weight Adjustments

As the sum of the preliminary survey weights are not constrained to equal 1.0, the weights must by adjusted so as to control the sum of the survey weights to be equal to 1.0.

For the individual market, the state-level weight adjustment is defined as:

Formula_6: State-Level Weight Adjustments

For the small group market, the state-level weight adjustment is defined as:

Formula_7: State-Level Weight Adjustments, for the small group market

Final State-Level Weights

The final state-level survey weight for the individual market can thus be defined as the product of the initial carrier weight and the adjustments made for the individual market:

SWIYSPif = IWIYSi *CFAIYSi*CEAIYSPif *SWAIYSPif

The final state-level survey weight for the small group market can thus be defined as the product of the initial carrier weight and the adjustments made for the individual market:

SWGYSPif = IWGYSi * CFAGYSi * SPAGYSP * CEAGYSPif * SWAGYSPif 

These final state-level survey weights sum to one with a state/market/year.

National-Level Adjustments

A national adjustment is applied to the final state-level survey weights to reflect the relative sizes across states within a market type (Table 7). The national adjustment is defined as:

Formula_8: National-Level Adjustments

where

S’ = set of sample states for which more than one filing was obtained for year Y

MTS' = number of member-months reported from the 2010 NAIC for all carriers from market type T in state S’

National-Level Single-Filer Adjustments

Given the uncertainty associated with estimates from states with only one filer (resulting from the sensitivity analysis described in Table 8 below) a final adjustment is applied so as to have those single filers included in the estimates but representing only themselves. This is accomplished through separate adjustments being applied to the single filers and all other filers.

The national-level single filer adjustment is defined as:

Formula_9: National-Level Single-Filer Adjustments

S” = set of sample states for which only one filing was obtained for year Y

MTSY = number of member-months reported from the 2010 NAIC for all carriers from market type T in state S (the set of sample states for which filings were obtained for year Y)

MTS'Yinumber of member-months reported from the 2010 NAIC for sample carrier i reporting in year Y from market type T in state S”

Final National-Level Weights

The final national-level survey weight is then defined as:

NWTYSPif = SWTYSPif * NSATSY * NSATSYi

 

Table 6: State-Level Weight Calculation for 2011 Alabama Small Group Market

ID (A Carrier (B) Product (C) Carrier MemberMonths from NAIC (D) Initial Carrier Weight (E) Number of Filings within Carrier (F) WithinCarrier Filing Adjustment Factor (G) Filing Adjusted Weight MEPS-IC Distribution (H) Adjusted MEPS-IC Distribution State Product Adjustment (I) Product Adjusted Weight Enrollment from Filing (J) WithinCarrier Enrollment Adjustment (K) Preliminary Weight State-Level Weight Adjustment (L) Final StateLevel Weight (M)
Total     3,975,301 1.031     1.000       1.000     0.998   1.000
14 55433 Indemnity 3,830,956 0.963690 1 1 0.963690 0.314 0.636 0.649659 0.626069 24,435 1 0.626069 1.002 0.627520
20 79413 HMO 119,902 0.030162 2 0.5 0.015081 0.180 0.364 17.208278 0.259516 428 1.009259 0.257113 1.002 0.257709
19 79413 Indemnity 119,902 0.030162 2 0.5 0.015081 0.314 0.636 0.649659 0.009797 436 0.990741 0.009888 1.002 0.009911
23 95322 HMO 23,585 0.005933 1 1 0.005933 0.180 0.364 17.208278 0.102095 N/A 1 0.102095 1.002 0.102331
18 95784 HMO 858 0.000216 3 0.3333 0.000072 0.180 0.364 17.208278 0.001238 16 0.842105 0.001043 1.002 0.001045
21 95784 HMO 858 0.000216 3 0.3333 0.000072 0.180 0.364 17.208278 0.001238 22 1.157895 0.001434 1.002 0.001437
22 95784 Indemnity 858 0.000216 3 0.3333 0.000072 0.314 0.636 0.649659 0.000047 19 1.000000 0.000047 1.002 0.000047
N/A N/A PPO N/A N/A N/A N/A N/A 0.507 N/A N/A N/A N/A N/A N/A N/A N/A

 

Table 7: National-Level Weight Calculation for 2011 Small Group Market (Alabama, Single Filer States)

ID (A) Carrier (B) Product (C) State (D) Final StateLevel Weight (E) Carrier MemberMonths from NAIC (F) State MemberMonths from NAIC (G) NationalLevel Adjustment (H) NationalLevel Single File Adjustment (I) Final NationalLevel Weight (J)
Total           117,303,294      
14 55433 Indemnity AL 0.627520 3,830,956 4,003,034 0.035965 0.997688 0.021414
20 79413 HMO AL 0.009911 119,902 4,003,034 0.035965 0.997688 0.008794
19 79413 Indemnity AL 0.257709 119,902 4,003,034 0.035965 0.997688 0.000338
23 95322 HMO AL 0.102331 23,585 4,003,034 0.035965 0.997688 0.003492
18 95784 HMO AL 0.001045 858 4,003,034 0.035965 0.997688 0.000036
21 95784 HMO AL 0.001437 858 4,003,034 0.035965 0.997688 0.000049
22 95784 Indemnity AL 0.000047 858 4,003,034 0.035965 0.997688 0.000002
(Other multifiling states) 107,301,971  
863 49948 Indemnity HI 1 1,533,781 2,302,815 1 0.012809 0.012809
1013 95839 HMO IA 1 6,196 2,504,194 1 0.000051 0.000051
1057 60095 Indemnity ID 1 507,420 1,191,280 1 0.004183 0.004183
Total (multifiling states)           111,305,005      

As a result of weighting, reported figures represent weighted member-months. When the text reads, hypothetically, “60 percent of carriers in the individual market had their rates approved,” this means that carriers with 60 percent of the weighted member-months in the individual market had their rates approved.


21 While we aggregate conversion filings with those from the individual market for the purposes of analysis, we do not expect these conversion filings to measurably impact the findings as they are few in number (approximately 13% of the individual market sample by count) and they tend to have low enrollments.

22 In this case, G is a constant – the market type T is either small group (G) or individual (I), but the product adjustment is only possible for the small group (G) market type.

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