Obamacare health insurance plans are required to provide essential health benefits,1 follow cost-sharing limits, and meet all other standards mandated in the Affordable Care Act.2 However, a McKinsey study found that the majority of provider networks in Obamacare marketplace plans excluded at least 30% of the 20 largest hospitals in their area3 and that plans with broader networks had 26% higher premiums.4 Even if a plan has a narrow network, it may choose whether to cover out-of-network providers and whether to require referrals for specialist visits.
Health maintenance organizations (HMOs) and exclusive provider organizations (EPOs) do not provide out-of-network coverage except in emergencies, while preferred provider organizations (PPOs) and point of service (POS) plans cover out-of-network care at a greater cost to the consumer. HMO and POS plans require referrals from a primary care doctor to see a specialist, but EPO and PPO plans do not require referrals in most cases.
Since PPO plans offer out-of-network coverage and do not require referrals to see a specialist, HealthPocket analyzed monthly premiums on the 2015 federal health insurance marketplace to determine whether they were lower in counties where PPO plans were available.5 In counties that did not offer PPO plans, the average Obamacare premium for a 40-year-old individual was $327.28. The average Obamacare premium in counties with PPO plans was slightly lower at $325.43, despite PPO plans having an average premium of $339.68 and accounting for almost half of all plan options on the federal marketplace. Monthly premiums for HMO, EPO, and POS plans were 5% higher in counties with no PPO plans than in counties with PPO plans.6
EPO plans had the greatest premium cost difference, with average premiums of $335.55 in counties where PPO plans were available and $387.21 in counties where PPO plans were unavailable, an increase of more than 15%. Premiums for POS plans were 6% higher in counties with no PPO plans than in counties with PPO plans, while HMO premiums were only 2% higher.
|Plan Type||Average monthly premium in counties with PPO plans||Average monthly premium in counties with no PPO plans||Percentage Increase|
Although PPO plans offer out-of-network coverage and do not require referrals to see specialists, their premiums were only the second highest of the four plan types. EPO plans, which accounted for less than 7% of plan options on the federal marketplace, had the highest average premium of $340.07. This average was 12% lower than the average premium for EPO plans in counties with no PPO plans.
HMO plans had the lowest average premium of $304.66, 10% less than the average premiums for EPO and PPO plans. 35% of the federal marketplace plan options were HMO plans, but just 9% were POS plans, which had the second lowest premium of $319.09.
HealthPocket also found premium differences between counties with only one available plan type and counties with multiple available plan types. Plans in counties with only one available plan type had an average premium of $350.61, 8% higher than the average premium of $324.06 for plans in counties with multiple available plan types. Among the 206 counties with only one plan type, 136 had PPO plans. None of the counties offered EPO plans, but 25 offered POS plans and 45 offered HMO plans.
The results of this analysis show that consumers benefit when PPO plans are available to them, even if they choose not to buy PPO plans, since the other available plans have lower premiums. This is especially true for consumers buying EPO plans, since they had the greatest decrease in premium costs when PPO plans were present.
HealthPocket also found lower premiums in counties with multiple plan types than in counties with only one plan type. This is consistent with research by the Department of Health and Human Services (HHS), which indicated that areas with a greater number of issuers tended to offer lower premiums and more plan type choices.7 However, the HHS analysis focused on the 2014 marketplace and considered one plan for each rating area, whereas HealthPocket analyzed all plans on the 2015 federal marketplace.
Among the four plan types, PPO and POS plans may appeal to consumers that want to continue seeing their current doctors if other plans do not cover their current doctors in-network. However, cheaper HMO plans could be preferable for consumers that do not mind staying in-network and getting referrals from their primary care doctor to see a specialist. Ultimately plan choice should be based on multiple factors including networks, premiums, cost-sharing, quality ratings, and benefit coverage.
Data on Obamacare health insurance plan types and premiums for a 40-year-old non-smoking individual was obtained from the 2015 QHP Individual Market Medical Landscape file. Premiums were analyzed for all metal plans, but not catastrophic plans, since not all consumers are eligible for catastrophic plans.
Subsidized plans and off-exchange plans were not included in the analysis. Only plans from states on the federal marketplace were included in the analysis.
This analysis was written by Jesse Geneson, data scientist at HealthPocket. Correspondence regarding this study can be directed to firstname.lastname@example.org.
1 “Essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.” Essential Health Benefits. https://www.healthcare.gov/glossary/essential-health-benefits/
2 Qualified Health Plan. https://www.healthcare.gov/glossary/qualified-health-plan/
3 The study found that 70% of provider networks exclude at least 30% of the 20 largest hospitals in their area.McKinsey Center for U.S. Health System Reform. Hospital networks: configurations on the exchanges and their impact on premiums. http://healthcare.mckinsey.com/sites/default/files/Hospital_Networks_Configurations_on_the_Exchanges_and_Their_Impact_on_Premiums.pdf
4 The study focused on silver plans on the exchanges and compared plans of the same carrier, product type, metal tier, and rating area.Ibid.
5 This includes metal plans available on healthcare.gov, but not plans from state-based marketplaces.
6 HealthPocket analyzed premiums for a 40-year-old non-smoking individual. All metal plans were included in the average, but not catastrophic plans, since not every consumer is eligible for a catastrophic plan.
7 Amy Burke, Arpit Misra, and Steven Sheingold. Premium Affordability, Competition, and Choice in the Health Insurance Marketplace, 2014. June 18, 2014. http://aspe.hhs.gov/health/reports/2014/premiums/2014mktplaceprembrf.pdf