A new collaboration on rising health care costs is bringing actuaries to the health reform discussion. Initiative 18/11, named to reflect the percentage of GDP the U.S. spends on health care compared to the rest of the developed world, is a joint project of the Society of Actuaries (SOA) and the Kaiser Family Foundation (KFF).

The two groups recently released a report, “Initiative 18/11: What Can We Do About the Cost of Health Care?” The report outlines some of the challenges the U.S. continues to struggle with, despite reforms such as the Affordable Care Act (ACA).

“While the U.S. pays more for health care, it falls short on many important quality measures, such as life expectancy, which is 78.8 years in the U.S. compared with 82.0 years in comparable countries. In addition, a 2017 Commonwealth Fund study ranked the United States last in overall quality of care compared with 10 similar countries,” the report said.

The SOA describes itself “the world's largest provider of actuarial research and education,” and KFF is one of the country's best-known health care policy and research groups.

The initiative was launched in March, 2018, with a conference that brought together more than 30 health care experts that included actuaries, health economists, employee benefits experts, and hospital administrators.

The new report is a result of that effort, and it finds that Initiative 18/11 will look closely at two key drivers of health care cost: the price of health care goods and services and chronic disease. The goal going forward is to assess new technologies, innovations, and analytics for managed care in order to find ways to address the burden of high health care costs.

The report said the group's planning committee has identified three main deliverables:

1) A research project analyzing the 5 percent of the population that accounts for 50 percent of the health care costs, with an emphasis on understanding the population, increasing early interventions, and reducing overall costs

2) A strategic initiative documenting the pharmacy development and pricing process, with the goal of improving transparency

3) A strategic initiative examining the impact new technologies and care models may have on cost and quality, with the goal of better understanding the current environment and identifying potential risks and opportunities

The group also talked about a concept called Managed Care 3.0, which they describe as a transformational model of health delivery. “This concept is still loosely defined at this point, but we can expect to see considerable evolution in both care models and administrative functions in the next few years as new technologies, data sources and analytical methods emerge,” the report said. “The changes will not be limited to technology alone. We can expect to see increased innovation in techniques to prevent diseases, identify gaps in care earlier, and coordinate needed care.”

The initiative said it will now launch a Phase 2 of its collaboration, and that will include the three deliverables listed above, along with some focus on issues such as specific chronic illnesses and consumer behavior.

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Instant Insights /

To control health care costs, call in the actuaries

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