Group Health, Inc.

Part III: Actuarial Memorandum

HealthPartners Individual Policies
Policy Number: CON-103.5 GHI IND

I. Scope and Purpose

This filing provides 2019 proposed rates for Individual ACA plans offered by Group Health, Inc. (GHI).
GHI is part of the HealthPartners family of related organizations. The rates are effective January 1, 2019
through December 31, 2019 for all plans.

The purpose of this rate filing is to demonstrate that the anticipated loss ratio meets the requirements of
62A.021 and federal MLR regulations. The actuarial memorandum is intended to demonstrate that the
premiums for these plans are not excessive in relation to the benefits provided and to demonstrate
compliance with state and federal requirements and restrictions on rating factors and actuarial pricing
values. This rate filing is not intended to be used for other purposes.

This actuarial memorandum is submitted in conjunction with the Part I Unified Rate Review template.
Differences between our projections and 2019 actual experience depend on the extent the actual
experience conforms to the assumptions used in our analysis.

Per the Department of Commerce instructions, we are submitting two Rate Data and Part I Unified Rate
Review templates. One set has rates that include the value of the Minnesota Premium Subsidy Program
and the other set does not. The Part III Actuarial memorandum describes the methodology used in
projecting rates that include the value of the Minnesota Premium Subsidy Program.

We reserve the right to review the appropriateness of these rates and the need to resubmit if there are
significant changes to ACA federal law or the MN ACA Individual marketplace such as:
• A major carrier leaving the MN ACA Individual marketplace
• MNCare members moving to the ACA Individual market

II. Part I Unified Rate Review Template Information

A. General Information

Company identifying information:

• Legal Entity Name: Group Health, Inc.
• State: MN
• HIOS Issuer ID: 34102
• Market: Individual
• Effective Date: January 1, 2019
Company Contact Information
• Primary Contact Name: Sara Stewart
• Primary Contact Telephone Number:
• Primary Contact email address:

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B. Proposed Rate Increase

The 2019 proposed average increase is -7.4%. The rate increases vary by plan option, ranging from -14%
to 0.5%. The variations are due to: a) a change to the Catastrophic plan factor, b) an adjustment for
additional cost sharing on Silver Exchange plans for the loss of CSR subsidies, and 3) an update to the
federal Actuarial Value Calculator for 2018 which prompted cost-sharing changes in plans and a merging
of similar plans to simplify our plan offerings.

Reason for Rate Increase(s)

The primary drivers of the proposed rate increase are:
• Increased utilization and medical inflation: We assume a 6.5% average annual trend which
includes changes in utilization and cost.
• Reinsurance: The 2018/2019 state-based reinsurance program (MN Premium Subsidy Program)
has a downward impact on rates as a result of the following factors: a) estimated reinsurance
recoveries, b) reduction in projected State Average Premium for risk adjustment
payments/charges, and c) reduction in the projected market morbidity assuming higher enrollment
of Individual members due to lower member premiums.
• 2018 Market Morbidity: Based on early indications, the 2018 market morbidity is better than that
assumed in the 2018 rate development. This has a downward impact on the 2019 rates.
• Change in Morbidity: The claims projection assumes an increase in individual market morbidity
level for 2019 due to the elimination of the individual mandate penalty and expansion of non-ACA
options for coverage.
• Health Insurer Tax: There is a moratorium on the health insurer tax in 2019.
Administrative costs have a slight downward impact on the rate increase, since we are trending these
costs at a lower trend rate than medical costs.

C. Experience Period Premium and Claims

Worksheet 1, Section 1 of the Part I Unified includes premium and claims for calendar year 2017 for all
members enrolled in both the GHI and HPIC Individual plans.

Premium (net of rebates) is earned premium for calendar year 2017. We expect no MLR rebates to be
refunded.

Claims are incurred in calendar year 2017 with a paid through date of March 31, 2018. Both paid and
allowed claims are processed through the HealthPartners claims system. The claims reflect adjustments
for IBNR, off system provider payments and pharmacy rebates.

To estimate IBNR, we calculated completion factors by service category using both a modified claim lag
methodology and a projected paid PMPM (by number of months after incurred date). We used actuarial
judgment to pick factors and apply them to the experience period data. Note that the analysis and factor
selection are based on fully insured commercial business.

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D. Benefit Categories
Benefit categories are defined based on HealthPartners internal service category definition. Assigning
service category to a claim is an automated process within HealthPartners claims data warehouse.

Note that the HealthPartners internal service category definition allocates the following services to a
different category than the suggested mapping in the 2019 URRT instructions:
• Home Health Care: Allocated to professional and outpatient service categories instead of “Other
Medical”
• Vision exams: Allocated to professional instead of “Other Medical”

E. Projection Factors
This section describes the factors used to adjust experience period allowed and paid claims to the
projection period as shown in Worksheet 1, Section II:

Changes to Morbidity of the Population Insured: Below is a description of the assumed changes in
morbidity reflected in the 2019 projection:
• Changes in overall Individual ACA market morbidity from 2017 to 2018: From 2017 to 2018, the
MN ACA Individual market experienced a small decline in membership based on the 2017 and
2018 enrollment studies from the MN Council of Health Plans. As a result, we assumed a slight
increase in both HP and Market morbidity level from 2017 to 2018.
• Several recent policy changes at the federal and state level are expected to lead to a deterioration
in the individual ACA market risk pool:
 Elimination of the individual mandate penalty
The elimination of the individual mandate penalty beginning in 2019 is projected to lead to an
increase in the overall morbidity (costs) of the individual ACA market as healthy individuals
are more likely go without coverage than individuals expecting higher health care costs.
Individuals who have left the ACA market are able to reenter the market without penalty if
their expected health care costs increase.
 Expansion of non-ACA options for coverage
The expanded availability of non-ACA health coverage options will exacerbate the
consequences of the elimination of the mandate penalty. These include: (a) Short-Term,
Limited-Duration (STLD) plans, (b) Association Health Plans (AHP), and (c) Minnesota’s
Agricultural Cooperative Health Plans. By providing coverage options attractive only to
healthy, low-cost individuals there is an increased likelihood that healthy members will leave
the individual ACA market driving up the market morbidity level and needed rates. Due to the
guaranteed issue requirement on the ACA market, individuals can return to the ACA plans if
their expected costs increase and the non-ACA options no longer work well for them.

Estimated Impacts on Individual ACA Market Premiums

Various studies have analyzed these policy changes and projected the impact on the individual
ACA market enrollment, morbidity level, and resulting rate level.
 The Congressional Budget Office estimates that due to the repeal of the mandate “average
premiums in the nongroup market would increase by about 10 percent … relative to CBO’s
baseline projections.” (CBO, November 2017, “Repealing the Individual Health Insurance
Mandate: An Updated Estimate”).

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  The CMS Office of the Actuary, in an April 6, 2018 memorandum, estimated that the
availability of STLD plans would cause a 6% increase to individual ACA market premiums;
3% of which would occur in 2019.
 A February 2018 report by the Health Policy Center of the Urban Institute, “The Potential
Impact of Short-Term Limited-Duration Policies on Insurance Coverage, Premiums, and
Federal Spending” projected an 11.1% increase in Minnesota’s 2019 Individual ACA market
premiums due to the increased availability of STLD plans and the loss of the individual
mandate penalty. This is lower than the 18.2% increase projected on average (across states
not prohibiting STLD plans).
 A Wakely Consulting Group report, “Effects of Short-Term Limited Duration Plans on the
ACA-Compliant Individual Market”, prepared for the Association for Community Affiliated
Plans, projected that the STLD plans would increase Individual ACA market premiums by
2.2% to 6.6% over the near-term, with .7% to 1.7% in the 2019 projections. The combined
impact of the repeal of the mandate penalty and the STLD plans was projected to be 10.8% to
12.8%.
 A February 2018 report by Avelere Health, “Association Health Plans: Projecting the Impact
of the Proposed Rule”, prepared for America’s Health Insurance Plans, projected a 2.7% to
4.0% premium increase in the individual ACA markets if the proposed AHP rule is
finalized. This projection covers a 5-year period; the 2019 impact is projected to be
significantly smaller.
There are several factors unique to Minnesota to consider in projecting the impact on
Minnesota’s market morbidity and needed premiums. These include:
 Minnesota implemented a state reinsurance program in 2018 lowering premiums in the
individual ACA market.
 Minnesota statute limits STLI plans to a maximum duration of 6 months (plans may be
renewed).
 Minnesota’s health plans showed strong 2017 financial results in the individual markets
suggesting that 2019 premium increases may be small.
 Due to the MNCare program, Minnesota has a much lower percentage of individual ACA
market members receiving a federal premium subsidy than most other states. As individuals
receiving premium subsidies are indifferent to the market premium level, this reduces the
number of healthy people expected to leave the individual ACA markets in states other than
Minnesota.
The first three factors listed would be expected to dampen the 2019 impact of the policy changes
on Minnesota’s market. However, the last factor could significantly amplify the impact seen in
Minnesota relative to other states.

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 Projected 2019 Increase in Market Morbidity
We considered the national analyses, along with the factors unique to Minnesota, to project the
expected impact on 2019 market morbidity for our projection. Please note that the longer-term
impact is expected to grow as the availability of the non-ACA coverage options increases.

Factor Morbidity Increase

Elimination of individual mandate penalty 5% to 8%
Expansion of non-ACA options for coverage 1.5% - 4%
Overall* 7.5%
*The estimated overall impact is the morbidity increase included in our experience projection.

• Change in open enrollment period: Due to the addition of a special enrollment period in 2019 that
will follow the open enrollment period, this adjustment is no longer applicable. We are making no
adjustment to our rates since the 2017 open enrollment and 2019 open + special enrollment
periods are very similar.

Other Adjustments: Below is a brief description of the changes reflected in this adjustment factor:
• Changes to Benefits:

• Change in demographic: Estimated impact of change in distribution of members by age from

2017 to projected 2019. We
varied the impact of change in demographic by metal level. Age factors are based on the
Minnesota ACA age curve.
• Change in tobacco: Estimated impact of change in % of smokers from 2017 to projected 2019.
• Risk Adjustment Pooling Adjustment: We performed a high claims analysis of our entire ACA
individual block for 2017, paid through March 2018, to adjust for the impact of the new risk
adjustment pooling program as defined in the 2019 Notice of National Benefit Payment and
Parameters. The parameters of this program are 60% of all claims incurred more than
$1,000,000.
• Catastrophic Adjustment: Estimated impact on claims due to the change in coverage requirement
for child only policy holders from 18+ to all ages. The impact is measured by the change in the
catastrophic plan factor from 2018 to 2019.
• Change in plan mix: The distribution of membership between metal levels has changed between
2017 and 2018.

Trend to 2018: We assumed 6.5% annual trend from 2017/2018 and 2018/2019.

F. Credibility Manual Rate Development

GHI Individual experience is fully credible; this section is not applicable.

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G. Credibility of Experience
Combined GHI and HPIC Individual experience includes a monthly average of approximately 57,000
members, and is therefore 100% credible.

H. Paid to Allowed Ratio

The Paid to Allowed average factor is the weighted average of the AV pricing values based on projected
membership. The ratio is equal to projected paid claims divided by projected allowed claims and includes
the impact of 2019 cost sharing changes.

I. Risk Adjustment and Reinsurance

• Risk Adjustment:
Experience Period Risk Adjustment, PMPM (Worksheet II): The experience period risk adjustment
PMPM is the 2017 risk adjustment transfers for GHI and HPIC ACA Individual members form the
July 2018 Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment
Transfers for the 2017 benefit Year. It is net of the 2017 risk adjustment fee of $0.13 PMPM.
Projected Risk Adjustment PMPM (Worksheet I and II): The projected risk adjustment PMPM
reflects the difference between the expected health risk of GHI ACA Individual members and the
overall ACA Individual market’s health risk. The risk adjustment user fee of $0.15 PMPM is included
in this category per URRT instructions. We have also included the estimated 2019 risk adjustment
pooling charge. Note that we are projecting to be a risk adjustment payor, so the projected net payable
amount will result in an increase to the premium rates.
The starting point of our risk adjustment projection is the 2017 risk adjustment transfers for GHI and
HPIC ACA Individual members from the July 2018 Summary Report on Transitional Reinsurance
Payments and Permanent Risk Adjustment Transfers for the 2017 benefit Year.

To project 2017 risk transfer amounts to 2019, we applied the following methodology:

o Looking at 2017 and 2018 marketwide results, we estimated the change in the Statewide
Average premium from 2017 to 2019. Note that the change from 2017 to 2018 takes into
account the impact of the MN Premium Subsidy program. We have also factored in the .86
adjustment that is part of the risk transfer formula beginning 2018.

• Reinsurance:
Experience Period Reinsurance Adjustment, PMPM (Worksheet II): There was no state or federal
reinsurance program in place for 2017, thus the experience period reinsurance PMPM is $0.00.
Projected Reinsurance PMPM (Worksheet I and II): Projected reinsurance recoveries as a result of
the MN Premium Subsidy program is reflected in the “Reinsurance" cell of Worksheet 1. The 2019
parameters of this program are 80% of all claims incurred between $50,000 and $250,000.

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J. Non-Benefit expenses and Profit & Risk
• Administrative Expense: GHI administrative expense is comprised of health improvement
expenses (including the cost of the frequent fitness program), operating expenses, and
commissions paid to agents and brokers. We projected administrative expenses to 2019 as
follows:
– Frequent Fitness: Frequent fitness expenses are based on 2017 expenses for all GHI and
HPIC Individual members. We applied a % annualized trend from 2017 to 2019.
– Broker and Commission fees: We assume a Brokers and Commission trend of % from
2017 to 2019 for the 2017 allocated administrative expenses reported to us from our
Finance department, and included in their statutory reporting.

Broker Commission PMPM

2017 Reported (incl. HPIC)
2018 Projected
Annualized Trend (2 years)

– Health Care Expense and Operating Expenses: Administrative expenses are based on
actual 2017 administrative expenses for the GHI and HPIC Individual market. We
anticipate an annualized trend for administrative expenses from 2017 to 2019 of %.
• Taxes: The following table shows GHI taxes and fees for 2019. Note the Exchange fee is
adjusted to reflect a % of premium over all 2019 GHI Individual plans.

Taxes/Fees
Medicaid Surcharge 0.60%
HMO Tax 1.00%
ACA Premium Tax 0.00%
Exchange Fee 1.60%
The Exchange User Fee assumption is calculated by distributing the 3.5% User Fee amongst all
GHI members based on February 2018 enrollment. 45.3% of our ACA Individual population is
Exchange members.
The ACA Premium Tax is set to 0.00% to reflect the tax moratorium in 2019. Also, the PCORI
fee will not apply to 2019 Individual policies since all policies will end after October 2019.
• Contribution to Surplus: The 2019 rates reflect an overall contribution to surplus of 3.0%.

K. Projected Loss Ratio

Based on the rate development described in the above sections and the taxes and healthcare expenses
in Section J, we anticipate a 2019 MLR based on the federally prescribed methodology of 89.1%. The
projected Minnesota state level loss ratio, in accordance with 62A.021, is 87.3%. The risk adjustment
transfer is included in the numerator in both calculations.

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L. Single Risk Pool
The projection period reflects the experience of all policies that we anticipate will be enrolled in the
Single Risk Pool. The Single Risk Pool includes all covered lives for the GHI ACA Individual product
in the Minnesota ACA Individual market.

M. Index Rate
The index rate for the experience period is the allowed claims adjusted for the removal of Non-EHB
benefits based on 2017 claims experience.
The projection period index rate is calculated by removing the impact of Non-EHB benefits from the
projected allowed claims PMPM in the Section III of the URRT. The 2019 Projected Index rate is
$485.78 PMPM.
N. Market Adjusted Index Rate
The market adjusted rate is the projected period index rate adjusted for all allowable market-wide
modifiers defined in the market rating rules, 45 CFR 156 80 (d)(1). The calculation of the market
adjusted index rate is shown in the table below. The adjustments for allowable market-wide modifiers
are calculated as follows:

Market Adjusted Index Rate Calculation PMPM

Projected Period Index Rate $485.78
Net Risk Adjustment Transfer $69.87
Net Reinsurance Recovery ($91.15)
Exchange User Fee $8.67
Market Adjusted Index Rate $473.15

• Risk Adjustment: Risk transfer payable PMPM of $49.41 PMPM adjusted to allowed claim basis
(average paid to allowed ratio of 0.7124). $49.77/0.7124 =$69.87
• Reinsurance: Reinsurance receivable PMPM of $64.76 PMPM adjusted to allowed claims basis
(average paid to allowed ratio of 0.7124). $64.94/0.7124= $91.15
• Exchange user fee: of weighted average premium ( ) adjusted by paid to allowed ratio:

O. Plan Adjusted Index Rate

The experience period plan adjusted index rate shown in URRT Worksheet II Section III is the
weighted average of the 2017 plan adjusted rates across all plans in the experience period from both
the GHI and the HPIC rate filings. The 2017 plan adjusted rates are from the 2017 URRTs filed in
September 2016.

The projection period plan adjusted index rates are shown in Exhibit A. Worksheet II Section IV
shows the overall weighted average plan adjusted rate for the GHI ACA Individual product. The
projection period plan adjusted rates reflect the following adjustments allowed by the ACA:
• Utilization and cost sharing relativities. Note that for 2019, we applied an additional cost sharing
adjustment to Silver Exchange plans only to account for the loss of CSR subsidies.
• Addition of embedded pediatric dental for non-Exchange plans

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 • Benefits in addition to EHB on non-actively marketed off-exchange plans.

• Expected impact of specific eligibility for catastrophic plans

• Administrative Costs

We calculated the projection period plan adjusted index rates by applying the AV Pricing values to
the market adjusted index rate. See Exhibit B for development of the plan adjusted index rates by
plan.

The weighted average of the plan adjusted index rates based on projected membership is equivalent
to the single gross premium average rate from Worksheet I, Section III of the URRT.

P. Calibration
The projection period plan adjusted index rates reflect an average population. These rates must be
calibrated for allowable rating factors of age, tobacco and geography. Calibration factors do not vary
by plan, and each calibration is performed using a unique weighting.

• Age Curve Calibration: We applied the projected 2019 member age distribution to the federal
ACA age factors with the Minnesota-specific child age factor of 0.89. We accounted for
contracts expected with 4 or more dependents under age 21 (and so have no billable premium), by
assigning an age factor of 0 to their weighting. The calculated results are a weighted average
factor of . The projection period plan adjusted index rates are divided by this average age
factor to calibrate the rates. This factor reflects a weighted average age of 49 rounded to the
nearest age.

• Geographic Calibration: The projected 2019 service area is Area 8 only. Area 8 is the 1.0
service area, so geographic calibration is not required

• Tobacco: We apply a tobacco load of 1.1515 for members age 18 and older. This factor was
developed for the 2014 filings based on: a) two studies (one from the Congressional Budget
Office and one from the American Journal of Health Promotion) and b) expected percent of
smokers who will self-report as smokers. The weighted average tobacco factor based on 2019
projected membership is . This factor is used to remove the portion of the cost that is expected
to be recouped through the tobacco surcharge. We have not updated this factor based on
emerging experience due to the low enrollment of members receiving smoker rates.

Q. Consumer Adjusted Premium Rate Development

The premium final rate to be charged is the Consumer Adjusted Premium Rate. The Consumer
Adjusted Premium Rate is the projection period plan adjusted rate calibrated to the age curve, tobacco
and geography, then multiplied by the allowable rating factors, specified by 45 CFR Part 147,
147.102. The allowable rating factors are:
• Individual vs Family: Premium for family coverage is determined by summing the premiums
for each individual family member. For family rating, we follow federal guidelines to only rate
for the three oldest covered children under age 21.
• Age: Age factors are the federal ACA age factors with the Minnesota-specific child age factor
of 0.89
• Tobacco status: Tobacco factor is shown in the Calibration section above.
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R. AV Metal Value
The AV metal values in Worksheet II of the Part I Unified Rate Review Template were based on the
Federal AV calculator for all plans, except 34102MN0010003, 34102MN0010003-04,
34102MN0010003-05, 34102MN0010003-06, 34102MN0010004, 334102MN0010010,
34102MN0070002, 34102MN0070003, 34102MN0070007 and 34102MN0080003. These plans
required an alternate methodology to be developed to generate an AV Metal level. Please refer to the
supporting documentation “GHI_UniquePlanCert.pdf" for a description of the alternate methodology
and the actuarial certification required by 45 CFR Section 156.135

S. AV Pricing Value
AV pricing values are based on the allowable rating factors: utilization and cost sharing relativities,
addition of pediatric dental benefits in addition to EHB, catastrophic plan adjustment, and variation in
administrative costs. Exhibit A shows the AV pricing values by plan based on these allowable
factors.

We utilized our proprietary Large Group Underwriting Model (LGUM) to develop the benefit relative
value for each plan. LGUM is based largely on an industry standard model from a national actuarial
consulting firm calibrated to our underlying book of business data. It provides a flexible yet
consistent basis for valuing relativities between various benefit designs including the effects of
induced utilization. It also incorporates the flexibility to price plans with or without the EHB pediatric
dental benefit. LGUM is populated with 2016 claim data.

This model assumes the same population morbidity for each plan priced, thus ensuring that our factors
include no adjustment for differences in health status, except for the catastrophic plan as allowed by
ACA regulation.

Due to the continuing uncertainty surrounding CSR payments, we have assumed that CSR payments
will not be paid for plan year 2019. The impact of this expected payment shortfall impacts only the
Silver on-exchange plans.

A standalone pediatric dental plan option is available on the Exchange, so these plans do not cover the
pediatric dental benefit. As required by ACA regulation, all non-exchange plans include the pediatric
dental in the base medical plan. The addition of pediatric dental is reflected in the AV pricing value.

T. Membership Projections
Projected membership was developed based on 2018 membership adjusted to reflect the assumed net
growth for 2019.

In 2018, we continue to see relatively low enrollment in CSR plans due to Medicaid expansion and
the continuation of MNCare. We expect to see a similar level in 2019. We are assuming no
membership at the .94 and .87 CSR levels (members will be enrolled in Medicaid or MNCare).

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U. Terminated Products
We are terminating no plans that were in effect as of 2017. However, on Worksheet II/ Sect I several
plans are labeled “Terminating” per the URRT instructions. These are GHI plans that have been
combined into plans that are available for 2019. The plans noted as terminating on the URRT are:
34102MN001001, 34102MN001006, 34102MN0010011, 34102MN001016, 34102MN001017,
34102MN001018, 34102MN007006, 34102MN007008 and 34102MN007009.

V. Plan type
Not applicable

W. Warning Alerts
Not applicable

X. Effective Rate Review Information

• Historical Membership and Loss Ratio

The HealthPartners ACA Individual products were introduced in 2014. Our historical experience
in the HPIC and GHI corporations combined is as follows:

GHI and HPIC Combined

Incurred
Average Premium Loss HPIC GHI
Year Claims
Members PMPM Ratio MLR MLR
PMPM
2014
2015
2016
2017

“Loss Ratio” is based on incurred claims and premium used for URRT Worksheet I Section I, as
well as the final risk adjustment and reinsurance payments reflected from URRT Worksheet 2,
Section III as follows: [Incurred Claims-Reinsurance]/[Premium – Risk Adjustment Payable].

For 2014-2016, “MLR” is from filed MLR reports. For 2017, we use the preliminary MLR as
filed in our 2017 Annual Statement. MLR results include HPIC grandfathered experience as
well.

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 • Historical Rate Increases
For 2014, all HealthPartners ACA Individual plans were new. Rate increases shown are for all
years from 2014 to 2018.

Year GHI HPIC

2015 8.12% 10.30%
2016 31.34% 32.24%
2017 53% 50%
2018 -7.5% NA

• Network Capacity Limit

We are setting a network capacity limit on total enrollment for the Group Health, Inc. individual
market members. Note that the enrollment limit applies to both Grandfathered and non-
Grandfathered members. Please refer to the Enrollment Cap Template for additional information.

• Statement of Good Financial Standing

We believe Group Health, Inc. is in good financial standing. This opinion is based on our high
credit ratings of A+ from Standard and Poor’s and A2 from Moody’s.

• Impact of MN Premium Subsidy Program

HP’s Individual 2019 rates would be approximately 21% higher without the MN Premium
Subsidy Program.

Approximately of the difference is attributed to the loss of estimated reinsurance recoveries,

approximately of the difference is due to higher risk adjustment payments due to an increase in
the State Average Premium, and the remaining is due to assumed higher market morbidity level
resulting from a higher number of Individual members leaving the MN Individual ACA market.
[Note that we would expect the impact of the reinsurance program to be larger in areas outside of
Area 8 due to higher provider costs. Thus statewide health plans may show a larger difference in
rates with and without the MN Premium Subsidy program.]

Y. Reliance
Other than the information and reports specifically described in the previous sections of this
memorandum, we did not rely on external data. Internally, we relied on off system payments,
pharmacy rebates, and administrative cost and tax information provided by the Finance department.

III. Proposed Rates

The resulting proposed rates are contained in a PDF version of the Rate Template. The single template
contains rates for all plans, covered on and outside the Exchange. All rates are effective January 1, 2019.

IV. Actuarial Certification

I, Sara Stewart, Senior Actuary, at HealthPartners, am a member of the American Academy of Actuaries
and meet the education and experience standards necessary to complete this actuarial certification.

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As demonstrated above, the requested rate increase produces an anticipated MLR that exceeds 80.0%
based on the rates shown in the rate template. Therefore, I believe the benefits provided are reasonable in
relation to the premiums to be charged.

To the best of my knowledge, I certify that the projected index rates are:
• In compliance with all applicable State and Federal Statutes and Regulations (45 CFR 156.80(d)(1))
• Developed in compliance with the applicable Actuarial Standards of Practice and
• Reasonable in relation to the benefits provided and the population anticipated to be covered
• Neither excessive nor deficient assuming the deterioration of the market due to the repeal on the
Individual mandate penalty and the expansion of the non-ACA coverage happens slowly. If it
happens more quickly than anticipated, the projected index rate will be deficient.

I certify that the index rate and only allowable modifiers as described in 45 CFR Section156.80 (d)(1) and
45 CFR Section 156.80(d)(2) were used to generate plan level rates.

I certify that the percent of total premium that represents essential health benefits included in Worksheet
2, Sections III and IV were calculated in accordance with actuarial standards of practice.

I certify that the AV calculator was used to determine the AV metal shown in Worksheet 2 of the Part I
Unified Rate Review Template for all plans except for all plans except those listed in Section R of this
memorandum. The supporting documentation, “GHI_UniquePlanCert.pdf,” contains the actuarial
certification for these plans as required by 45 CFR Section 156.135.

The Part I Unified Rate Review Template does not demonstrate the process used by the issuer to develop
the rates. Rather it represents information required by Federal regulation to be provided in support of the
review of rate increases.

Sara Stewart, FSA, MAAA – Senior Actuary

August 17th, 2018

Date

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 Exhibit A
Group Health, Inc. Actuarial Memorandum
AV Pricing Values and Plan Adjusted Rates

AV Plan
Pricing Adjusted
Plan ID Value Rate
34102MN0010014 0.7545 $357.01
34102MN0010010 0.8218 $388.85
34102MN0010005 0.8715 $412.35
34102MN0010003 0.9039 $427.66
34102MN0010004 1.0527 $498.07
34102MN0070001 0.5859 $277.22
34102MN0070004 0.7557 $357.58
34102MN0070002 0.8245 $390.11
34102MN0070005 0.8646 $409.07
34102MN0070003 0.8963 $424.07
34102MN0070007 1.0577 $500.46
34102MN0090001 1.0344 $489.45
34102MN0080001 1.033 $488.74
34102MN0080002 1.0371 $490.70
34102MN0080003 1.0622 $502.58
34102MN0080004 1.1712 $554.15

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 Exhibit B
Group Health, Inc. Actuarial Memorandum
Development of Plan Adjusted Rates

Market Adj AV and Cost Provider Benefits Catastrophic CSR Admin Plan Adj
Plan ID
Rate Sharing Network Adj for EHB Plan Adj. Adj Rate
34102MN0010014
34102MN0010010
34102MN0010005
34102MN0010003
34102MN0010004
34102MN0070001
34102MN0070004
34102MN0070002
34102MN0070005
34102MN0070003
34102MN0070007
34102MN0090001
34102MN0080001
34102MN0080002
34102MN0080003
34102MN0080004

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