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International Actuarial Association Health Section Colloquium - Cape Town 2007

International Actuarial Association Health Section Colloquium–Cape Town 2007

By Ian Duncan

I have written in the past questioning the need for an International Actuarial Association. I remain skeptical in principle about any form of international rule–setting body with authority to impose its standards on U.S. actuaries. But I have to say that, after attending the International Health section Colloquium in Cape Town, I think that there is some good that such a section can do for the profession.

The Section's colloquium, which was held recently in Cape Town, South Africa, was a model of organization. Howard Bolnick, known to many of us as a former SOA president, is president of the International Actuarial Association Health Section. Emile Stipp, a South African actuary was chairman of the organizing committee. Both deserve great credit for their organizational work. The teaching sessions were generally of higher quality than those we have at SOA meetings, possibly because the selection of speakers was competitive and speakers were allowed a full 45 minutes to develop a thesis.

And there were enjoyable social events. The colloquium drew about 250 participants from numerous countries. The U.S. attendance was small, due no doubt to the cost and flying time to get to Cape Town. In my case, it took two days; but then, being a travel junkie, I flew through Dubai in the Persian Gulf. There were two memorable keynote addresses: Professor Tim Noakes (a physician), who is head of the sports medicine institute at the University of Cape Town, spoke about the physiology of exercise, why the human body is made the way it is, and some of the issues we face as society changes. Adrian Gore, founder and CEO of the largest health insurer in South Africa (Discovery Health, with 2 million members) discussed his company's Vitality program, a sophisticated program of incentives directed at encouraging health plan members to be aware of, and take more responsibility for, their health. Memo to the SOA: we need to recruit both of these gentlemen to speak at an SOA meeting, soon. South Africa has a different regulatory environment than the United States but there are probably more similarities with the United States than differences, and there may well be things we can learn from South African practitioners like these in the areas of wellness and consumer motivation.

I addressed the conference about some of the research that the Health Section has supported on care and disease management, which appeared to resonate with the international audience. However, the area where there appears to be the greatest common interest is risk adjustment. I attended three of the risk adjustment sessions, one by Dr. Kathryn Antioch, an academic from Melbourne Australia, who spoke about some of the work being done in using DCGs, DRGs and other models in Australia for hospital reimbursement. Professor Van Veen of Erasmus University in Rotterdam described some of the work being done in Holland and other European countries using risk adjustment techniques. Holland is at the forefront of a movement that recognizes the need to ensure that insurers receive appropriate funding for members with conditions in an insurance system, and the role that risk–adjustment can play in this policy goal. The same topic was continued on the second day of the conference by Heather McLeod, an actuary and professor at the University of Cape Town, who discussed South Africa's Risk Equalization Fund, an account into which all employers and health insurers must either pay (or from which they receive subsidies) in relation to the relative, condition–based risk of the members enrolled in the plan. This is an interesting thread of research that many different countries appear to be following, and of which we in the United States need to be aware. In the event that the employer–based system is replaced with an individual system, there will need to be a way to ensure that members with condition–related resource needs continue to receive the implicit subsidies that they currently receive in the employer system.

The risk adjustment component was one of the conference strengths. The presence of practitioners (both actuaries and non–actuaries) from different countries allowed for interchange of methods and experiences. Needs are more similar than they are different–different countries are searching to solve the same problem of providing adequate funding for those with health needs. Unfortunately the United States was under–represented, so it was possible to think that our issues are not similar to those of the rest of the world, or that we have nothing to learn (or demonstrate) to other countries. One place to encourage more international interchange is in the Annual Predictive Modeling and Risk Adjustment conference, and we should make sure that there is an international component in future conferences.

Given the location of the conference in Africa, there was obviously a significant focus on covering those who don't have access to health care. Covering those without insurance is a concern to us in the US, but the scale of the problem in the developing countries of Africa is enormous. Unlike the US, where many of the uninsured can afford to purchase insurance but do not, in African countries those without access to healthcare also lack basics of life. Rodney Lester, an Actuary at the World Bank in Washington DC spoke about insurance programs that the bank is developing in countries in Africa. A couple of actuaries from Canada have begun to work with the Bank on these issues, but this is an area of great need and opportunity.

I attended the conference because it was held in Cape Town, the city in which I began my actuarial career in 1971. I remembered Cape Town 36 years ago as a city with spectacular scenery, friendly people and lots of good wine. It hasn't changed much, just gotten bigger, with the addition of a great new international conference center. The major social event of the conference was an outing to Groot Constantia, a seventeenth century wine estate near Cape Town. Memo to the SOA: we should have more winery excursions as part of our meetings–they are great for encouraging mingling!

All in all, it was a good conference, and I look forward to the next. Perhaps if a venue closer to the United States is chosen more U.S. actuaries can be persuaded to attend. They will find it worthwhile.

Ian Duncan speaking to the International Actuarial Association Health Care conference in Cape Town about the SOA Research project on Care Management Outcomes.