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Biotech / Medical : Oxford Health Plan (OXHP)
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To: Andreas who wrote (530)12/13/1997 1:25:00 PM
From: jeffbas  Read Replies (1) of 2068
 
Re: "doesn't know what its costs are"

You make it sound like an easy task to know that. While Oxford has been guilty of many things, you are on weak ground poking fun at them
on this one. Every group health business will eventually know what its costs WERE. So what. What actuaries get paid a lot for in this business is making good ESTIMATES of what the costs will be in the future. This involves estimating at what rate future medical costs
will rise, whether claim or premium payment lag patterns experienced in the past will continue in the future given a constantly changing mix of business, etc. Premium rate guarantees for typically a year
require estimates of the future to be made, and the price for missing
a moving target you cannot now see can be very high.

I would also add that you can stick all the honest, disinterested, highly paid actuaries in a room you want and they will still have differing opinions on the same data. Doubling their salaries would make no difference.

One of Oxford's main mistakes as I have posted elsewhere is that because of administrative/system failures they lost control of the data. Therefore, they were not even able to make competent ESTIMATES
of what was and would be going on.
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