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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.

Provider-owned insurers play an important but underappreciated role in the individual insurance market. About one-third of the insurers who sell plans in the ACA-qualified individual market are provider owned. Two-thirds of the population live in areas where at least 1 provider-owned insurer sells plans. Provider-owned insurers are located on the West Coast and in the upper Midwest, some Western states, and Texas.

We find that premiums are similar between provider-owned and traditional insurers. The exchange market has a number of features, including standardization of actuarial values and benefits and market-level risk adjustment, that facilitate direct comparisons of premiums between insurers. Although risk adjustment is imperfect, risk adjustment provisions of the ACA entail substantial transfers to and between plans. Risk adjustment significantly diminishes selection-driven differences in plans’ profits.14,15 As a result, plans ought to set premiums based on the average level of risk in the market rather than the level of risk among likely enrollees. To the extent that there is residual selection, the direction of the bias is unclear. Healthier enrollees are probably more willing to trade off lower premiums for stricter limits on provider choice in provider-owned plans, but participants in the associated health system form a natural customer base for provider-owned insurers.16

Unlike La Forgia et al,10 we use data covering the entire United States, our data are recent (from 2017), and we adjust standard errors for clustering by insurer. Adjusting standard errors for clustering has a large effect on the size of CIs.


Our results may be biased by differences in plan quality between provider-owned and traditional insurers. Johnson et al17 and Frakt et al8 find that provider-owned insurers in the Medicare Advantage market score higher on a composite quality measure.


Providers that want to sell insurance face a number of obstacles.18 They must employ a sufficiently large number of physicians or contract with unaffiliated providers, pay an external vendor for claims processing, and attract enrollees from outside their patient population. They must also maintain their pre-existing relations with commercial insurers. Unlike Kaiser Permanente, most providers that own insurers treat patients with other sources of insurance coverage, including traditional commercial plans.

Despite these challenges, a number of providers have successfully entered the individual insurance market and are able to sell competitively priced plans, according to our data. One-third of the insurers selling ACA-compliant plans are provider owned. Lacking data on enrollment, we cannot determine if the number of enrollees in provider-owned insurers has increased over time. However, the ability of provider-owned insurers to wring cost savings out of the system may improve as they gain experience and market share.

Author Affiliations: Department of Health Policy and Management, Emory University (DHH), Atlanta, GA; Department of Health Policy and Management, Johns Hopkins University (BH), Baltimore, MD; Vanderbilt University (JG), Nashville, TN; University of Southern California (ET), Los Angeles, CA.

Source of Funding: This work was supported by Robert Wood Johnson Foundation grant 73800.

Author Disclosures: Dr Howard received Robert Wood Johnson Foundation grant 73800. Dr Graves has a grant pending from the Agency for Healthcare Research and Quality and has received a National Cancer Institute R01 grant on the Affordable Care Act; his institution is a major medical center that contracts with insurers. The remaining authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (DHH, BH, JG, ET); acquisition of data (DHH, JG); analysis and interpretation of data (DHH, BH, JG, ET); drafting of the manuscript (DHH); critical revision of the manuscript for important intellectual content (DHH, BH, JG, ET); statistical analysis (BH, ET); and obtaining funding (DHH, BH, ET).

Address Correspondence to: David H. Howard, PhD, Department of Health Policy and Management, Emory University, 1518 Clifton Rd NE, Atlanta, GA 30322. Email:

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