One of the biggest Obamacare-related stories in recent weeks: A wave of health insurance companies that sat out of the Affordable Care Act’s exchanges this year are asking back in for 2015.
So far, at least 31 new plans are entering across 12 exchanges, with nearly every state seeing at least one new insurance company join its exchange.
Much of the national focus has fallen on giants like United Healthcare and Aetna, which decided to opt out of the exchanges last year — in some cases, even leaving states like California — yet are now moving back in.
But dig a little deeper: Several of the new plans are run by hospitals.
- In Indiana, at least two plans joining the exchange this fall are provider-owned;
- In Michigan, one of the new health plans is owned by a local health system; and
- In Virginia, one new health plan — owned by a hospital and physicians in Lynchburg — has asked into the exchange.
Some of that’s simple numbers — as more plans are owned and operated by providers, you’d expect more to be entering the exchanges. There are now north of 100 provider-owned health plans, and about a dozen more are springing up every year. For example, Detroit Medical Center bought and revamped ProCare in 2012 to get into the Medicaid managed care business; now called Harbor Health, the plan will join Michigan’s exchange this fall.
But it also reflects the shift toward new industry dynamics. Hospitals are increasingly being asked to take on more risk for patient care, and for all the challenges that running a health plan brings, owning a health plan may be the ultimate risk mitigation strategy.
Which means that after years of hospitals running away from the model, provider-owned health plans are the new old thing.
Why Providers Are Getting Back Into the Insurance Business …
Providers have offered insurance plans for at least several decades, but that interest reached a crest in the 1990s.
“The development of provider-owned health plans continues to be an important strategy of integrated delivery systems,” a contributor wrote in the Journal of Healthcare Financial Management — 15 years ago.
Back then, being able to offer a health plan was seen as essential element for systems trying to compete amid the industry’s move toward capitation and managed care.
But many hospitals and physicians ended up divesting those health plans, given spiraling costs and operating challenges. Provider-owned health plans generally had a harder time turning a profit than their more traditional counterparts, partly because the plans tended to cover fewer lives and could be more vulnerable to medical claim costs.
So why are providers getting back into this often difficult market? Their return has been driven by a few factors — the broad push toward capturing more reimbursement related to care quality and outcomes, which has been accelerated by the ACA, and many large providers’ interest in diversifying their business.
… and Why They’re Moving Into Exchanges
One of the providers burned by its early-1990s venture into the insurance business: Indiana University Health, which abandoned its first plan amid the market backlash to managed care. But the 18-hospital system is trying again, Zina Moukheiber writes at Forbes — and is among the plans entering Indiana’s exchange in the fall.
“In the 1990s, the emphasis was on trying to reduce care to reduce utilization,” according to John Fitzgerald, who heads IU Health Physicians. “The difference here is to intensify care to improve health, and cost and utilization will fall.”
Jim Parker, CEO of IU Health Plans, told the Indianapolis Business Journal that this move toward taking on more accountability for patient outcomes, outside of the hospital — a concept known as “population health” — is driving the system into the exchanges, too.
“We know that the most affordable care a member can receive is the care that was made unnecessary through effective approaches that improve health,” according to Parker. “IU Health Plans chose to enter the ACA Marketplace in a measured way in 2015 to further develop its abilities with a segment of the market that would benefit greatly from the model of care we are designing.”
Adopting New Risk Introduces Significant Risk
Nearly 40 states have yet to release their plan filings, meaning even more provider-backed health plans will likely end up entering the exchanges this fall.
Many of these plans may have waited a year out of caution — like United and Aetna, hoping to see the playing field — and also out of necessity, given that so many provider-owned plans are relatively new.
Joining the exchange “is not the sort of thing you can do overnight,” Ellen Pryga, the American Hospital Association’s Washington, D.C.-based policy director, told Health Plan Week. “And for anyone to be on the exchange, they have to be a fully licensed health plan,” she added, noting the series of deadlines that a new plan would face.
And there’s also no guarantee that hospitals and doctors can more efficiently run a health plan in the exchanges, J.K. Wall writes at the Indianapolis Business Journal. He points to filings that show two provider-owned health plans — MDwise Inc. and Physicians Health Plan of Northern Indiana — both asked for at least a 35% hike in their average premiums this fall, compared to much smaller requests by Anthem and more traditional insurers.
“It appears that the health insurers that have no connection to doctors and hospitals have been best at doing the basic blocking and tackling of health insurance: pooling and pricing risk,” Wall adds.
Around the nation
Here’s what else is making news on the road to reform.
Washington state is an example of Obamacare success, opportunity. At the Washington Post‘s “Wonkblog,” Jason Millman details how even in states where the ACA is succeeding, it faces significant challenges. (See a related look by “Road to Reform” on how California is “leading the pack” on rolling out Obamacare, but hurdles still loom for the Golden State.)
Hobby Lobby plaintiffs aim for victory in court, ‘Christian nation’: Politico has an interesting profile of the Green family, who own Hobby Lobby and are behind the Sebelius v. Hobby Lobby lawsuit. Author Stephanie Simon notes that the Supreme Court case has drawn national attention to the family’s strong religious beliefs — specifically the Green family’s decision to spend hundreds of millions of dollars on a bible museum and other evangelical activities.
Kentucky governor: Don’t use the word ‘Obamacare.’ The term has been “demonized,” according to Gov. Steve Beshear (D), who said he willfully chooses to avoid using the term, Dylan Scott reports for Talking Points Memo.