Plan ownership matters

May 1, 2013

CMS has overlooked the importance of identifying not for profit status for consumers in the exchanges

Controversy abounds regarding many aspects of the federal, state and federal/state health insurance exchanges to be established under the Patient Protection and Affordable care Act (PPACA).

One of the most fundamental questions yet to be answered is whether the vast majority of consumers using these exchanges will be able to make meaningful choices among the specific benefit plans being offered by the health plans participating in a particular exchange.

The Centers for Medicare and Medicaid Services (CMS) has designed a Summary of Benefits and Coverage form (SBC) for each health plan to complete to help consumers make meaningful choices. Unfortunately, at least for now, CMS has excluded one key piece of information that research has shown that consumers want and for good reason. This needs to be corrected as quickly as possible, before the exchanges "go live."

The missing piece is a clear indication of  whether a particular choice is being offered by a health plan that is not-for-profit or for-profit.

Why is that important? First, a nationwide Zogby International telephone survey conducted in August 2010 queried consumers about the ownership status of health plans. The key findings were as follows:

• Most consumers surveyed think there is a difference between not-for-profit and for profit plans (by a 4-to-1 margin);

• Most think the difference is important (by a 4-to-1 margin); and yet

• A significant portion (one-third) do not know whether the plan they are participating in is not-for-profit or for-profit

Of those surveyed who didn’t know the ownership status of their plan, many were low-income individuals and families who will be purchasing individual or small group coverage through their health insurance exchanges (with or without federal premium subsidies) and whose coverage and care needs have always been a special concern and focus of not-for-profit health plans as well as not-for-profit healthcare providers.

Secondly, there is empirical evidence to back up consumer intuition that there are indeed important differences between the two types of health plans:

For all seven years that J.D. Power & Associates have issued member-satisfaction ratings of private health plans, most of the top-rated plans have been not-for-profit.

In the latest ratings, 82% of the best, 86% of among the best and 75% of better than most plans are not-for-profit, even though they represented only 44% of all of the plans rated.

For all eight years that the National Committee for Quality Assurance has issued quality ratings, most top quality health plans have also been not-for-profit.

In the latest ratings, not-for-profits dominated the lists of the top 10 quality plans, (100% of Medicare, 100% Medicaid, 100% private), of the top 20 quality plans  (100% Medicare, 75% Medicaid, 95% private) and of the top 25th percentile quality plans (50% Medicare, 64% Medicaid, 54% private), even though they represented relatively small portions of the all the plans rated (30% Medicare, 38% Medicaid, 24% private).

The evidence is clear. Consumers want the ownership status of health plans offering  coverage options to be transparent, and they deserve it. Now it is up to the federal, state, and federal/state health insurance exchanges to make that happen.

Bruce McPherson is president & CEO of the Alliance for Advancing Nonprofit Health Care.