California Individual And Group Health Insurance Plans

MarketWatch - May 19: San Francisco - The value of health insurance rose 8% from 1997 to 2002, though increased worker cost-sharing has eroded some of the gains since then, according to a new study.The authors of a study published in the May/June issue of Health Affairs measured health-plan generosity in terms of actuarial value, meaning the percentage of a medical bill paid by the plan versus the portion an employee pays out of pocket, assuming health-care utilization patterns of a standard adult population.The late 1990s brought health-insurance changes that favored workers financially, said Jon Gabel, lead author of the study and vice president of the Center for Studying Health System Change."During this period of time, we had a full-employment economy, a shortage of workers, a backlash of managed care and were retreating from managed care," Gabel said. "One way we retreated was to make networks broader, and that increased the actuarial value of plans." "I'm more likely to go in network when I have a broader network," thus saving money, he added.A second reason for the increase: preferred provider organizations (PPOs) and point of service (POS) plans switched from having coinsurance to flat copayments in those years, Gabel said. "When you have a copayment, it's not just that $10 is better than 10%," he said. "When you have a copayment and go to a physician's office the deductible does not apply. All of a sudden a lot of people no longer faced deductibles when they went to see their physician."Health-plan value varies widely depending on not only where you live but also how big or small your employer is and especially the kind of plan you choose, according to the report. Adjusted premiums are 25% higher in indemnity plans and 18% higher in PPOs than in health maintenance organizations (HMOs,) according to the study. "What you pay out of pocket is sort of the flip side of the actuarial value, so you have lower expected out of pocket costs in an HMO and consequently you have higher actuarial value," Gabel said.Even so, PPOs remain popular. They dominate the market with 61% of eligible Americans enrolled in PPOs in 2005, up from 42% in 2000 and 28% in 1996, said Gary Claxton, vice president of the Kaiser Family Foundation.Despite their thrifty appeal, HMOs drew only 21% of the population last year, down from 29% in 2001 and 31% in 1996, the peak of HMO penetration, he said. A handful of states like California are the exception, where HMO market share approaches or exceeds the national mid-90s peak.So why aren't more people rushing out to give HMOs another chance? "I think their use of prior authorization particularly and a bunch of scare stories led to the managed-care backlash and now rightly or wrongly many people associate an HMO with inferior care," Gabel said. "Even during the backlash, the people who study this...had a different opinion." Though quality of care was equivalent with PPOs, customer-service problems and the requirement to see a primary-care doctor before going to a specialist led to consumer revolt, particularly among upper-middle-class people, he said. Claxton agreed. "People seem to not like the restrictions in HMOs even though they are unquestionably cheaper. It probably will continue, too, because the PPO seems to be a better platform for some of this consumer-driven stuff we're all going to try out."High-deductible plans with or without a savings account attached "fit into an HMO but not as nicely as a PPO," Claxton said. States that have large HMO market shares and those with densely populated urban areas get more bang for their health-insurance premium buck than do rural ones, the study found. What's more, workers at small businesses with one to nine workers pay 18% more for their coverage than those in firms with 1,000 or more employees. That's partly because of the general economic disadvantage of purchasing for a small pool of workers as well as the practice of paying a percentage of the premium to brokers who set up health insurance for small firms, Gabel said.The actuarial value of the premium dollar goes furthest in populous states such as California, New York, Massachusetts and Pennsylvania while rural ones such as Maine, Wyoming, Wisconsin and West Virginia have the lowest value. Larger states tend to have a larger share of big businesses while small states have more small employers, Gabel said. While it's true that the move from coinsurance to copayments during the 1990s likely increased actuarial value, it's not always easy to tell which plans have copayments exclusively compared with a blend of the two, Claxton said."It wouldn't be unheard of to have a plan staying with a copay for a doctor's office visit but then having coinsurance for lab tests, X-rays and the stuff that will come out of it," he said.Equally difficult to discern from existing data is whether more-expensive items like biologic drugs carry lower out-of-pocket thresholds that make coverage less protective for those who need it, Claxton said.