Maybe we can use analytics to create new intelligence

Predictive Modeling News, recently asked a panel of experts about the implications of Aetna pulling out of all but four states’ public Exchanges, in addition to the UnitedHealth and Humana withdrawals. Here’s what Peter Nichol had to say.

Patients will experience price hikes as plan selection is further restricted. Participating members are stuck buying from Exchanges, as off-Exchange offerings are not eligible for federal subsidies. It’s pleasant for policy makers to chant that health insurance Marketplaces offer quality coverage to Americans. What’s unsaid is that this quality coverage will now come at a higher price. Consumers focus on four main areas when choosing where to buy products. It doesn’t matter whether the customer is buying health insurance for the family on the Exchanges or an inflatable toy for the pool at Toys ‘R’ Us. Consumers buy focused on price, assortment, experience and access. Price and experience matter to consumers and they always will.

Patients will continue to experience plan churn as health plans express greater concern over growing losses. Incorrectly priced premiums didn’t cover operational costs. Members were sicker than initially anticipated. Consumers don’t care. They care about price, and prices continue to go up. Is there value in bringing quality coverage to Americans if they can’t afford it? If you owned a business and were not making money in the Obamacare Marketplaces, how long would you continue to lose money? For Aetna, that answer was after about $430 million in losses. More than 50% of the CO-OP insurers already folded. Apparently, their level of acceptable losses was a bit lower.

Policy changes on risk adjustment are required to make the Exchange model profitable for insurers and beneficial to the public. Today it’s not working. Smaller or regional plans don’t have the capital to make risk-adjusted payments. For perspective, Aetna had obligations of $600 million into the risk adjustment pool for 2015 and Kaiser Permanente’s contribution totaled $237.5 million. Is capping the risk adjustment payments the answer? Can prescription drug data help make more accurate risk adjustments? It’s proposed that beginning in 2018 prescription drug data will be used to help identify risk adjustments. The thinking is that even if a member doesn’t have a claim, understanding the medications he or she is taking will provide markers of the conditions which he or she may have.

Shouldered with historical data since 2013 and the ability to simulate various models, this is a perfect condition for predictive analytics to drive better outcomes. Maybe, just maybe, we can use predictive analytics to create new intelligence for tomorrow’s Exchange risk adjustment programs, ultimately controlling price for patients.

Nichol is a healthcare business & technology executive who’s been recognized for digital innovation by CIO100, MIT Sloan, and PMI. He’s a managing director at OROCA Innovations and can be reached at

Predictive modeling Peter B. Nichol CIO


Nichol, Peter B. (2016). Maybe we can use analytics to create new intelligence. Predictive Modeling News, Volume 9 (Issue 10), 4.
TechCrunch. (2014). Salesforce Hopes To Ride Analytics Wave With New Business Intelligence Service (online image). Retrieved October 24, 2016, from
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Peter is a technology executive with over 20 years of experience, dedicated to driving innovation, digital transformation, leadership, and data in business. He helps organizations connect strategy to execution to maximize company performance. He has been recognized for Digital Innovation by CIO 100, MIT Sloan, Computerworld, and the Project Management Institute. As Managing Director at OROCA Innovations, Peter leads the CXO advisory services practice, driving digital strategies. Peter was honored as an MIT Sloan CIO Leadership Award Finalist in 2015 and is a regular contributor to on innovation. Peter has led businesses through complex changes, including the adoption of data-first approaches for portfolio management, lean six sigma for operational excellence, departmental transformations, process improvements, maximizing team performance, designing new IT operating models, digitizing platforms, leading large-scale mission-critical technology deployments, product management, agile methodologies, and building high-performance teams. As Chief Information Officer, Peter was responsible for Connecticut’s Health Insurance Exchange’s (HIX) industry-leading digital platform transforming consumerism and retail-oriented services for the health insurance industry. Peter championed the Connecticut marketplace digital implementation with a transformational cloud-based SaaS platform and mobile application recognized as a 2014 PMI Project of the Year Award finalist, CIO 100, and awards for best digital services, API, and platform. He also received a lifetime achievement award for leadership and digital transformation, honored as a 2016 Computerworld Premier 100 IT Leader. Peter is the author of Learning Intelligence: Expand Thinking. Absorb Alternative. Unlock Possibilities (2017), which Marshall Goldsmith, author of the New York Times No. 1 bestseller Triggers, calls "a must-read for any leader wanting to compete in the innovation-powered landscape of today." Peter also authored The Power of Blockchain for Healthcare: How Blockchain Will Ignite The Future of Healthcare (2017), the first book to explore the vast opportunities for blockchain to transform the patient experience. Peter has a B.S. in C.I.S from Bentley University and an MBA from Quinnipiac University, where he graduated Summa Cum Laude. He earned his PMP® in 2001 and is a certified Six Sigma Master Black Belt, Masters in Business Relationship Management (MBRM) and Certified Scrum Master. As a Commercial Rated Aviation Pilot and Master Scuba Diver, Peter understands first hand, how to anticipate change and lead boldly.