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Insurers Blend Consumerism, Limited Access

January 3, 2007
Related Topics: Benefit Design and Communication, Health and Wellness, Latest News

Some health insurers have begun to combine aspects of consumer-driven care and restricted access by offering high-deductible health plans that use a less expensive but more limited network of health providers that are part of health maintenance organizations.

Beginning in January, Kaiser Permanente customers will have access to a high-deductible health plan in California, where the company is based and has the bulk of its membership. Earlier this year Kaiser launched a high-deductible plan paired with a health savings account in other regions.

Aetna began offering high-deductible health plans on its HMO network in a limited number of regions where it operates. By year’s end, the insurer plans to offer the product in 21 of the 28 states where it operates.

The two companies say that in general, their new products offer the prospect of lower premiums associated with HMO plans while making consumers more sensitive to cost through high deductibles.

“Employers definitely want this,” says Kaiser spokeswoman Beverly Hayon.

Beyond satisfying a demand for lower premiums, health insurance companies will benefit from the new arrangement. Since high-deductible plans pay for most of the cost of health care after the deductible is met, health plans that can pay doctors less will save money and pass those savings on to employers in the form of lower premiums.

“The risk the carrier has is reduced for a large amount of claims,” says Tim Padva, president of CheckPoint HR, which administers benefits.

Whether it will become another emerging trend on the frontier of health care consumerism is an open question. Cigna does not offer such a plan, spokesman Joe Mondy says. At UnitedHealth Group, customers can choose whether they want to use an HMO or preferred provider organization network, the most common choice, for their high-deductible plans.

“It’s up to the employer to choose,” says Ian Stanton, a UnitedHealth Group spokesman. “We’ve found the PPO is a little more popular.”

That popularity, of course, mirrors a general aversion to HMOs, which usually require referrals for additional care and have fewer doctors in their network.

“In large part, [customers] never went to HMOs to begin with, so I wouldn’t expect them to become the dominant form of insurance now,” says Paul Fronstin, senior director of health research at the Employee Benefits Research Institute.

The plans may be similar, but the companies are not. Kaiser is an integrated health maintenance organization; it owns its network of doctors, hospitals and pharmacies. Aetna, on the other hand, contracts with a network of independent doctors and hospitals.

Because Kaiser doctors are on salary, the price they would charge consumers would not be based on rates negotiated between a doctor’s group practice and an insurance company. This could make prices arbitrary, a consumer advocate worries.

“If a physician is on salary, how do you charge for 30 minutes of his time?” says Greg Scandlen, president of Consumers for Health Care Choices, a group that advocates for greater consumerism in health care.

Kaiser members, though, may prefer an organization that owns the entire continuum of health care, where consumers can practice “one-stop shopping,” Scandlen says.

Padva believes that high-deductible plans on HMO networks will make health insurance more affordable for small businesses that would otherwise not offer health care. But, he says, because most large employers offer a number of health insurance options, a plan with a large deductible and a limited number of doctors would probably not attract a lot of members.

Jeremy Smerd

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