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The American Journal of Managed Care December 2018
Feasibility of Expanded Emergency Department Screening for Behavioral Health Problems
Mamata Kene, MD, MPH; Christopher Miller Rosales, MS; Sabrina Wood, MS; Adina S. Rauchwerger, MPH; David R. Vinson, MD; and Stacy A. Sterling, DrPH, MSW
From the Editorial Board: Jonas de Souza, MD, MBA
Jonas de Souza, MD, MBA
Risk Adjusting Medicare Advantage Star Ratings for Socioeconomic Status
Margaret E. O’Kane, MHA, President, National Committee for Quality Assurance
Reducing Disparities Requires Multiple Strategies
Melony E. Sorbero, PhD, MS, MPH; Susan M. Paddock, PhD; and Cheryl L. Damberg, PhD
Cost Variation and Savings Opportunities in the Oncology Care Model
James Baumgardner, PhD; Ahva Shahabi, PhD; Christopher Zacker, RPh, PhD; and Darius Lakdawalla, PhD
Patient Attribution: Why the Method Matters
Rozalina G. McCoy, MD, MS; Kari S. Bunkers, MD; Priya Ramar, MPH; Sarah K. Meier, PhD; Lorelle L. Benetti, BA; Robert E. Nesse, MD; and James M. Naessens, ScD, MPH
Patient Experience During a Large Primary Care Practice Transformation Initiative
Kaylyn E. Swankoski, MA; Deborah N. Peikes, PhD, MPA; Nikkilyn Morrison, MPPA; John J. Holland, BS; Nancy Duda, PhD; Nancy A. Clusen, MS; Timothy J. Day, MSPH; and Randall S. Brown, PhD
Relationships Between Provider-Led Health Plans and Quality, Utilization, and Satisfaction
Natasha Parekh, MD, MS; Inmaculada Hernandez, PharmD, PhD; Thomas R. Radomski, MD, MS; and William H. Shrank, MD, MSHS
Primary Care Burnout and Populist Discontent
James O. Breen, MD
Adalimumab Persistence for Inflammatory Bowel Disease in Veteran and Insured Cohorts
Shail M. Govani, MD, MSc; Rachel Lipson, MSc; Mohamed Noureldin, MBBS, MSc; Wyndy Wiitala, PhD; Peter D.R. Higgins, MD, PhD, MSc; Sameer D. Saini, MD, MSc; Jacqueline A. Pugh, MD; Dawn I. Velligan, PhD; Ryan W. Stidham, MD, MSc; and Akbar K. Waljee, MD, MSc
The Value of Novel Immuno-Oncology Treatments
John A. Romley, PhD; Andrew Delgado, PharmD; Jinjoo Shim, MS; and Katharine Batt, MD
Medicare Advantage Control of Postacute Costs: Perspectives From Stakeholders
Emily A. Gadbois, PhD; Denise A. Tyler, PhD; Renee R. Shield, PhD; John P. McHugh, PhD; Ulrika Winblad, PhD; Amal Trivedi, MD; and Vincent Mor, PhD
Currently Reading
Provider-Owned Insurers in the Individual Market
David H. Howard, PhD; Brad Herring, PhD; John Graves, PhD; and Erin Trish, PhD

Provider-Owned Insurers in the Individual Market

David H. Howard, PhD; Brad Herring, PhD; John Graves, PhD; and Erin Trish, PhD
Provider-owned insurers sell individual policies in areas that cover 62% of the US population and have premiums similar to policies of traditional insurers.
ABSTRACT

Objectives: To describe the number and availability of individual market plans sold by provider-owned insurers and compare differences in premiums between traditional and provider-owned insurers.

Study Design: Cross-sectional analysis.

Methods: Using the Robert Wood Johnson Foundation’s HIX Compare data, we identified insurers selling Affordable Care Act (ACA)–compliant policies in the individual market and identified those insurers owned by health systems by using information on their websites. We determined the number of insurers selling policies in each market and the size of the population living in areas where provider-owned insurers sold plans in 2016 and 2017. We used least squares regression to compare premiums between traditional and provider-owned insurers within markets, and we adjusted standard errors for clustering at the market and insurer level.

Results: There were 149 insurers that sold ACA-compliant plans in 2017, of which 51 were provider owned. Provider-owned insurers operated in 208 of the 503 exchange markets. We estimate that about 62% of US residents (more than 170 million people) live in a market in which a provider-owned insurer sells plans. Premiums did not differ significantly between traditional and provider-owned plans in 2017.

Conclusions: Provider-owned insurers play a prominent role in the individual insurance market. Although health systems that sell insurance have incentives to reduce costs, provider-owned insurers and traditional insurers have similar premiums.

Am J Manag Care. 2018;24(12):e393-e398
Takeaway Points

By combining the provision and financing of insurance, provider-owned insurers have the potential to reduce costs. We describe the role of provider-owned insurers in the individual insurance market.
  • There were 149 insurers that sold Affordable Care Act–compliant plans in 2017, of which 51 were provider owned.
  • Provider-owned insurers operated in 208 of the 503 exchange markets.
  • About 62% of US residents (more than 170 million people) live in a market in which a provider-owned insurer sells plans.
  • Premiums did not differ between traditional and provider-owned plans in 2017.
Health policy experts have touted the benefits of integration between insurers and providers for over 40 years,1 but the model has been slow to catch on. Commercial insurers and Blue Cross Blue Shield plans have dominated the health insurance market. The federal government has tried to promote provider–insurer integration via accountable care organizations (ACOs). Although ACOs face limited downside risk, policy makers clearly hope to nudge the healthcare system to be more like Kaiser Permanente,2,3 a fully integrated delivery system that is often held up as a model of efficient, high-quality healthcare delivery.

In this paper, we describe the number and geographic reach of provider-owned insurers in the individual insurance market, and we compare premiums between provider-owned and traditional insurers. The individual market is of special concern for policy makers, given the exits of some prominent insurers from the exchange markets and subsequent reports of rising premiums. Previous analyses have focused on the role of provider-owned insurers in the Medicare Advantage market and the insurance market generally. Twenty percent of Medicare Advantage enrollees were in plans operated by provider-owned insurers in 2016, and 11 of 19 new Medicare Advantage insurers were provider owned.4 In 2013, there were 107 providers selling insurance that covered 18 million enrollees, including Medicaid managed care and Medicare Advantage enrollees.5

Historically, it has been difficult to evaluate the claim that Kaiser Permanente6 and other provider-owned insurers have lower costs. Insurance premiums for employer-based insurance policies are not publicly available, and the lack of standardization of benefits makes it difficult to compare premiums even when they are available. Insurance claims data are an important source of information about healthcare spending generally, but either integrated systems do not release claims data or the data do not have encounter-level transaction prices.

The RAND Health Insurance Experiment remains the most rigorous comparison of costs between provider-owned and traditional insurers. Subjects were randomized to different tiers of fee-for-service health plans or Group Healthcare Cooperative of Puget Sound, a health maintenance organization. Costs were 28% lower in the Group Healthcare arm.7

Frakt et al8 found that provider-owned insurers had higher premiums in the Medicare Advantage market in 2009. However, premiums in the Medicare Advantage market are highly regulated. If a plan submits a bid below the benchmark, the plan receives a rebate that it must use to increase benefits. Half of the plans in the sample used by Frakt et al had $0 premiums.

The degree of standardization in individual policies brought about by the Affordable Care Act (ACA) offers a novel opportunity to compare premiums between provider-owned and traditional insurers. Premiums are publicly available, insurance products are standardized, and premiums depend on consumer characteristics to a limited degree and in ways that are observable. For plans sold on the exchanges, robust risk adjustment weakens the close correspondence between insurers’ profits and enrollee characteristics that exists in most other insurance markets.

Blumberg et al,9 using 2016 data on premiums for plans sold on the exchanges, found that the minimum Silver plan premium in a market was $12 lower if 1 of the insurers participating in the market was provider owned. Their analysis had 1 observation per market.

La Forgia et al10 used 2016 data for plans sold on the exchanges in 30 states to compare premiums between provider-owned insurers and 5 categories of traditional insurers. They found that premiums for Blue Cross Blue Shield plans were similar to those for provider-owned insurers, but premiums for national commercial plans were $260 higher. Our study differs from theirs in a number of respects. We (1) use data covering all 50 states and Washington, DC; (2) compare premiums between provider-owned insurers and all other insurers, which we believe is a more interesting, policy-relevant comparison; (3) include market, versus state, fixed effects; (4) adjust standard errors for clustering of plans by market and by insurer; and (5) use 2017 data.


 
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