H.M.O Plans Have The Lowest Premium Increase

Health insurers are selling more than 100,000 plans at a county level through the Affordable Care Act’s marketplaces, at radically different prices and varied designs. The carriers range from established local Blue Cross plans and national for-profit behemoths to upstarts like local hospital systems and the new consumer-oriented co-ops that were created under the federal law.

Many people will see their premiums increase significantly for 2015 if they haven’t yet taken the advice of my colleague, Margot Sanger-Katz, to shop around. But a new analysis from the McKinsey Center for U.S. Health System Reform suggests insurers had some luck in holding down prices if they offered plans that limited a consumer’s choice of doctors and hospitals.

Plans featuring health maintenance organizations or restricted networks of providers typically had the lowest year-over-year premium increases, according to McKinsey, which sifted through information on the 223,000 plans offered in the marketplaces at the county level over the last two years. Plans featuring an H.M.O. had a median increase of only 2 percent. The more widely known P.P.O., or preferred provider organization, plans, which typically allow people to go outside their plan’s network if they are willing to pay a greater share of the cost, had a median increase of 9 percent.

The same contrast was found in comparing the median price increases for plans designed around a narrowed network, in which people are limited to a smaller group of hospitals or are asked to pay more when they go to an expensive facility. While plans featuring broad networks had a median increase of 8 percent, narrowed network plans increased just 4 percent.

Plans that limit a patient’s choice of where to go to seek care are not without controversy, of course. H.M.O.s experienced a backlash in the early 1990s after employers embraced them as a solution to rising health care costs, and patients and doctors complained about strategies they said were aimed at keeping patients from getting the care they needed.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary