Premiums for Provider-Owned Health Plans

One supposed benefit of a provider-owned or sponsored health plan is that because the provider is at risk, through the premium charged by the health plan, the usual fee-for-service incentives to over-provide services are ameliorated.  The rationale is that the providers will be more cautious in rendering and ordering services when they know they are responsible for the patient’s costs.  A study from insurance finder app firm HealthPocket seems to debunk this theory.   (HealthPocket Study)  Provider-owned plans currently insure around 10% of the private market but are growing faster than other plan types.  HealthPocket looked at 12 counties across the country that had a variety of plan ownership structures.

The survey found that on average for coverage purchased on the insurance exchanges, bronze coverage from provider-owned plans cost 13% more than that from non-provider-owned plans, silver coverage (the most commonly chosen, with almost two-thirds of enrollees, cost 12% more and gold coverage, 13% more.  In only 2 of the 12 counties was a bronze plan from a provider-owned insurer the cheapest option, in 4 such a silver plan was and in 2 a gold one was.  The findings won’t surprise veterans of the health insurance business–when providers own a health plan, the provider-oriented objectives almost always win out over the health plan objectives.  So provider-owned plans are unlikely to pay their providers less or use more strict utilization control measures.  And even in plans owned by large provider systems, not all, not necessarily even most, of the providers in the plan network are associated with the owners.