For example, an actuary with a data base that includes data from a managed-care plan that uses the same principles and practices envisioned for the State project would not need to make assumptions about the cost impact of the State's proposed method of managing care, nor or would he or she have to undertake the complex modeling of aggregate demand for treatment followed by determination of the effect of managed care on modality utilization distributions. Similarly, the actuarial data that include the populations to be covered by the plan and the various services in the benefit package would minimize the number of assumptions required. Costs Costs of actuarial studies can vary widely. The amount of the winning bid did not differ greatly from the second bidder. It may be that the competing firms believed that the experience to be gained in doing this study would be useful to market other studies, for other benefit packages under Washington's health care reform plan or for other States contemplating similar efforts.
States can control the costs of actuarial studies with careful planning.
To the extent that the benefit package and the covered populations require these separate PMPM net cost estimates, study costs cannot be controlled without making some rather risky assumptions. It may be that separate estimates are required because the State wantes to evaluate options for persons or benefits to be covered in the plan or because it has failed to anticipate plan details requiring revisions in estimates. Selection Washington's health care reform required many actuarial studies for many different health care benefits, ranging from small to massive. To accomplish all this, the Health Services Commission first held a formal competition, from which three firms were selected as well qualified with fair rates. The State's Division of Alcohol and Substance Abuse could then select an actuary for its chemical dependency study from the group of three firms, using an informal procurement.