As U.S. President Donald J. Trump once said, health care is complicated. Health actuaries live deep in the weeds of what is arguably health care’s greatest complication—the financing of care. We operate in a world that is increasingly scrutinized by legislators and regulators at both the federal and state levels. The issue is polarized. Health coverage is either the best ever or a failing disaster.
The future of the health care industry in the United States is uncertain—health markets have ridden currents driven by lawsuits and legislative efforts, and health care continues to be a prominent element of political campaigns. When these ingredients are mixed into a single stew, we find that health product pricing increasingly involves an element of political projection, with a variety of interest groups offering up their views on the potential impacts of any legislative, regulatory and judicial changes on our markets.
But don’t let this health-specific screed breed a false sense of complacency—similar issues have been part of life insurance (principle-based reserving, anyone?), pensions (hello, Pension Benefit Guaranty Corporation, I see you’re in the news again!), property and casualty (what is this “climate change” I keep hearing about?) and other actuarial fields. With political tensions increasing around us, how do we ensure we use our best judgment and avoid falling prey to our personal prejudices when serving our principals? Professionalism is the answer.
As actuaries, we occupy a rare position in society as (relatively) unbiased searchers for the truth. Using data and carefully crafted assumptions, we help create the future, and our analyses can have a meaningful impact on the financial safety systems that support our modern way of life. This position allows us to inform the greater conversation, but it comes at a price—we need to uphold that trust through our words and actions.
Our rigorous examination structure helps ensure aspiring actuaries develop the basic level of technical competence to do this work correctly, but that in and of itself is not enough. U.S. actuarial organizations, such as the American Academy of Actuaries (the Academy), the American Society of Pension Actuaries, the Casualty Actuarial Society (CAS), the Conference of Consulting Actuaries (CCA) and the Society of Actuaries (SOA), adopted a Code of Professional Conduct1 to help us understand not just what we need to know to work in this profession, but how we should act to uphold this trust. The precepts of this code tell us how we can engage in the necessary and sensitive task of reflecting political potentialities into our work products. As we binge-navigate the precepts, we see how most of them apply, and that each serves to inform us how we should tackle the third rail that is politics in a professional way.
THE ONE WHERE YOU WADE INTO THE MIDDLE OF A FIRESTORM2
When we analyze the impacts of politically volatile events, we need to recognize our responsibility to the public. We work for our principals, but the responsibility to be as “right” as possible for the good of the public must be reflected in how we approach these analyses, and not just the desires of the people writing the checks.
In the maelstrom that was 2017’s “Repeal and Replace” effort, there was no shortage of discussion, though the debate tended to be inflammatory rather than informative. I was involved in a broad effort to put together a fact-focused discussion of the legislative provisions of the American Health Care Act, and one of our primary goals was to get the facts of the proposal out into the open—absent the rhetoric. This enabled the broader public to see a more neutral view of the new world of health care reform. Through exercise of integrity and competence, we can create confidence that we understand the potential environments that we are preparing for and can help shepherd our financial safety systems through periods of change.
THE ONE WHERE YOU DECIDE NOT TO WRITE THE REPORT3
As we analyze complicated political elements, it can be tempting to speak on items we find interesting rather than those within our scope of experience and education. When we speak outside of our expertise, we risk meaningful errors through an insufficient appreciation and understanding of the facts and the assumptions that underlie these debates. When we make these errors, we risk not just our personal reputations, but the reputations of all actuaries.
However, avoiding this temptation can be a challenge. We all have our personal takes on current events, and political identity plays an increasingly prominent role in societal interactions (I am not necessarily saying this a good thing, but rather a fact of modern life). When you factor in the increasing tendency for work life and personal life to spill over into each other, it becomes ever more challenging to avoid speaking personal opinions in a manner that can be viewed as within our professional capacity.
Those who know me know I am a veritable fount of opinions on a wide range of topics, and (as with most people) many of those topics are not, strictly speaking, within my areas of actuarial expertise. I’ve canned more article ideas than I’ve completed because, as an actuary, I am not qualified to write them. But it is also important to know that this consideration does not prevent us from having thoughts and opinions (even actuarial opinions) on the topic du jour. We just need to do our best to distinguish between the topics we can speak on as actuaries as opposed to the topics we speak on as engaged human beings.
Just because an opinion is held by an actuary (even on Twitter) does not make it an actuarial opinion. This is a good thing! But it doesn’t relieve us of the obligation to make sure that we are as clear as we can be when our words are—and aren’t—given in our professional capacity. Ultimately, by keeping our powder dry and saving our voice for those topics on which we are expert, we maximize the power of that voice and uphold the dignity of our profession.
THE ONE WHERE YOU FOLLOW THE RULES4
The Actuarial Standards of Practice (ASOPs) provide recognized pathways to analyses and broadly inform how we should do our work. As actuarial students, we are told again and again to adhere to ASOPs 23 (data quality) and 41 (actuarial communications). Other ASOPs may prescribe limits on how we approach certain tasks to ensure we adhere to the strongest professional standards.
Back in 2015, when the first round of Patient Protection and Affordable Care Act (ACA) risk corridor payments were yet to be published, I spent a lot of time (as did many commercial health actuaries) analyzing data and attempting to understand just how impactful revenue neutrality changes were likely to be on the program. ASOP 23 in particular presented challenges in this work, and ultimately placed significant limits on the usefulness of that analysis as an actuarial report. But the learnings from this analysis helped pave the way for later work, once more relevant and reliable data became available. As we consider potential political impacts on our work, we need to make sure we uphold these standards to provide as much certainty as possible that we are doing our job as a professional. This will help ensure that our outward-facing work product is deserving of the confidence that actuarial reports are often accorded.
THE ONE WHERE YOU SAY WHAT YOU DID5
As actuaries, we make assumptions, and (big surprise here) these assumptions can then drive our results. In many cases, these assumptions are clear and unambiguous. But when dealing with predictive assumptions, we often are dealing with competing views of facts and behaviors, and we face a heightened risk of criticism by those who disagree with our baseline assumptions. By communicating all of our assumptions and their downstream effects clearly, we help others understand the logical basis for our assertions. We also give recipients the ability to understand and ultimately validate our reasoning (even if they disagree with our conclusions), helping them make their own informed decisions.
Additionally, we are called to take responsibility for our communications, as well as to acknowledge any source of funds for a project. This helps ensure that those reading an article or research paper can evaluate the authors and their sources, which provides further context to sensitive topics of discussion. We all have our biases, and it is usually harder to identify our own biases than it is to identify the biases of others. Openly discussing our assumptions helps us minimize the impact of those biases on our overall analyses, and it also helps others who may not view the world in the same way to understand how we arrived at conclusions.
While these requirements at times can make our reports seem pedantic and stand as solid enemies to pith, I find these obligations also help focus reports on actuarial responsibility and prevent the missteps of the pundit class. Disclosure enhances credibility and creates a firm foundation that gives our work the ability to rise above the partisan fray.
THE ONE WHERE EVERYONE KNOWS FOR WHOM YOU WORK6
Our perceived impartiality is the product of previous generations and is perhaps our most powerful asset.
By actively avoiding actual and potential conflicts of interest, we help promote that impartiality by limiting the opportunity for people to question our competence to perform the work fairly and to the best of our abilities.
With my personal interest in regulatory affairs, I often find myself working on reports that can affect multiple clients. At times I have turned down specific projects that sounded interesting to continue doing work that I value. However, this helps me, and those with whom I work, feel confident that I am providing unbiased and impartial advice (or at least as unbiased and impartial as we can make it), reflecting the facts of the situation and not the specific interest of the related parties.
THE ONE WHERE YOU MAKE SURE EVERYONE KNOWS WHAT YOU ACTUALLY SAID7
In many cases, our work products are used by our principals to influence decision makers, and doubly so when political elements are involved. Actuaries can help inform the public discussion, but as with any detail-driven analysis, there are those who will seek to see through the forest for the one tree that slants their direction. By seeking to limit opportunities for misquoting and misrepresentation, we can help ensure that our words are heard in the way we intend and lead users to make well-informed decisions.
The temptation of including a quotable quote within a report must be weighed against the need to avoid generating misleading takeaways for less careful readers. Best practices lead most firms to post copies of white papers and other public reports on their website. But this helps me, too—not only is it nice to know where I can find copies of old white papers I’ve written, I also respect the professional value of being able to refer back to the official source to find exactly what was said.
THE ONE WHERE YOU DON’T SPILL THE BEANS UNNECESSARILY8
When we perform work that references sensitive political topics, maintaining the confidentiality of the information can be even more challenging than when such data is used in more standard work. As those who disagree with our conclusions push and prod and test our assumptions and thought processes, we may face significant pressure to surrender any confidential data that drives our conclusions. But, just as disclosure is key to trust, so too is maintaining confidentiality of proprietary information. While conclusions drawn from such data may face more pushback as individuals question conclusions with which they disagree, the data also often offers additional breadth and allows us to produce better, broader and more detailed analysis that furthers our role in informing the public debate.
Many actuarial firms have certain confidential tools and data sources that we cannot share according to the terms and conditions needed to ensure sufficient data contributions. On the other hand, this volume of data gives additional credibility to the results, and we sometimes need to do extra work to accommodate both the need for transparency for regulatory authorities and the need for confidentiality of proprietary information. This helps ensure we can continue to do the same quality of work in the future.
THE ONE WHERE YOU ARE NICE TO THE PEOPLE WHO DISAGREE WITH YOU9
It is impossible to understate the importance of courtesy and cooperation when dealing with sensitive topics that require significant judgment. By their nature, these kinds of assumptions and thought processes are the very discussions that inflame opinions and generate some of the most extravagant rhetoric in the political arena. By exercising courtesy and cooperation, we promote our ideas and not ourselves. This—to the degree that other parties cooperate, of course—allows the discussion to stay focused on the actual issues, arguments and policies, rather than devolving into ineffective acrimony.
We can help those who agree with us and those who do not to better understand the facts underlying our analyses, and we can dampen the distractions of knee-jerk dialogue through comity and consideration. In this way, we de-emphasize ourselves and are in a better position to leverage the respect given to the actuarial profession. For my own part, I’ve found that taking feedback with humility and consideration helps pave the way for discussions that improve the public discourse and help better inform both my understanding and the understanding of those with whom I interact.
FOCUSED ON FACTS
With all of this said, entering the public debate can be fraught with pitfalls, and projecting the future only enhances the risks to which we expose ourselves. By following the guidelines of our profession, we can best ensure that we represent future facts and not fantasies, and help policymakers, principals and other stakeholders in our respective areas of practice leverage our information to better inform decisions and, ultimately, to help safeguard the financial security of the systems we steward.
- 1. American Academy of Actuaries. Code of Professional Conduct. Actuary.org, January 1, 2009 (accessed November 13, 2019). ↩
- 2. Ibid. See Precept 1: Professional Integrity. ↩
- 3. Ibid. See Precept 2: Qualification Standards. ↩
- 4. Ibid. See Precept 3: Standards of Practice. ↩
- 5. Ibid. See Precept 4: Communications and Disclosure. ↩
- 6. Ibid. See Precepts 5 and 6: Communications and Disclosure. ↩
- 7. Ibid. See Precept 8: Control of Work Product. ↩
- 8. Ibid. See Precept 9: Confidentiality. ↩
- 9. Ibid. See Precept 10: Courtesy and Cooperation. ↩