Are hospitals a broker’s future insurance carrier?

A number of healthcare systems are now aiming to sell ACA policies to patients, leading to questions on their quality and the future of the industry landscape

Life & Health

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Count hospitals in with a number of non-traditional groups attempting to compete with insurance carriers for agent and consumer business.

According to a new report from the McKinsey Center for US Health System Reform, there are currently 64 insurance plans led by providers like hospitals or healthcare systems available through the health insurance marketplaces. Next year, there will be 72. In fact, 19% of new carriers on the exchanges in 2016 will be provider-led plans.

In one sense, this is not an entirely new notion. Health systems like Kaiser Permanente in California or Intermountain Healthcare in Utah have long sponsored insurance plans, and claim that combining clinical and claims data leads to better, more cost-efficient care for patients while providing their systems with an influx of new patients.

Supporters also say provider-led plans are priced competitively. An analysis from the Urban Institute’s Health Policy Center shows that the lowest-priced silver-level plans are often provider-led policies. Indeed, based on ratings in 21 states, the nation’s lowest-priced silver plans include those sponsored by  New York’s North Shore-LIJ Health System, Oregon’s Providence Health and Services and Inova Health System in Virginia.

However, the proliferation of such plans is not entirely agreeable to the healthcare community or, unsurprisingly, the insurance sector.

“They’re inexperienced,” said Gunjan Khanna, a partner with McKinsey’s healthcare practice. “The viability of that business and the ability to manage that is a question.”

Khanna says it may take years for healthcare providers to acquire the skills necessary to manage financial risk and coordinate care beyond the hospital or clinic in question.

Similarly, there is no evidence that provider-led plans provide any more consumer choice than plans offered through traditional health insurers. Network coverage through these plans varies, with some only covering services within that system.

So should brokers feel comfortable recommending these plans to their clients – particularly in an environment where non-traditional insurers like the ACA-created co-ops are floundering?

Perhaps in some cases, says Khanna.

“The exchanges have pushed the concept of narrow networks front and center,” said Khanna. Consumers and their agents may want to “consider a provider plan, because it’s based around a network of providers and at heart a network is built around a healthcare system.”

The long-term viability of these plans, however, remains to be seen.
 

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