Are Integrated Plan-Providers Associated with Lower Premiums? Preliminary Results from the Health Insurance Marketplaces

Hospitals and insurers have traditionally been separate lines of business. However, as the health insurance industry becomes more consolidated, hospitals and health systems have started to enter the health insurance business and vertically integrate. The health insurance marketplaces established under the Affordable Care Act have made it easier for hospitals to offer health plans and compete with established insurers, while insurers are exerting increased control over health delivery by acquiring health systems and physician group practices. This financial integration between health plans and providers could possibly lower premiums through increased efficiency by reducing transaction costs, as well as impact health care quality and accessibility. Our research compares premiums among different insurer types in 335 rating areas that spanned 30 states. More specifically, we compare the lowest and average premiums of silver plans offered to 27-year olds by integrated plan-providers, large national insurers, regional insurers, Blue Cross Blue Shield (BCBS), Consumer Operated and Oriented Plans (Co-Ops), and previously-Medicaid insurers in state-based and federally facilitated marketplaces in 2015.  

Data on premiums by insurer and rating area were obtained from the 2015 Robert Wood Johnson Foundation Health Insurance Exchange database. Market and socio-demographic characteristics were derived from the American Hospital Association Annual Survey, Census Bureau, and Area Health Resource File. Insurers were classified into mutually exclusive categories based on a hierarchy (integrated plan-providers, previously-Medicaid, BCBS, Co-Ops, national and regional) by reviewing insurer websites. We estimated the association between insurer type and the lowest and average premiums at the rating-area-level using an ordinary least squares (OLS) regression with robust standard errors and population weights. We adjusted our OLS model for socio-demographic and market characteristics and state fixed effects. The analysis was limited to rating areas with an integrated plan-provider. We also ran a number of robustness checks to our preferred model specification.

We find that the premiums of integrated plan-providers were priced modestly higher than Co-Ops and previously-Medicaid insurers for the lowest silver plans, after adjusting for market characteristics and differences between states. On average, the lowest premiums for Co-Ops and previously-Medicaid insurers were about $180 lower per year (6% lower) than integrated plan-providers (p<.05). In contrast, BCBS’ premiums were marginally higher ($84 per year, p<.10) and national insurers’ premiums were substantially higher ($480 or 16% higher per year, p<.001) than integrated plan-providers. Regional insurers’ premiums were not statistically different. For the average premiums across all plans offered by insurers, only previously-Medicaid insurers were lower than integrated plan-providers. All other insurers had substantially higher premiums. This finding reflects the large spread of premiums across the various plans offered by Co-Ops, regional, national, and BCBS insurers.

In conclusion, integrated plan-providers and previously-Medicaid insurers priced premiums that were lower while national insurers priced premiums that were higher across all plan types. The premium difference across insurer types is possibly due to provider network sizes. Integrated plan-providers likely include narrower networks while national insurers likely include broader networks. This analysis will be updated with 2016 data by the time of the presentation.