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Health Insurance Shake Up Continues In N.H.

Todd Bookman

For the second time in less than a week, the health care landscape in New Hampshire is absorbing a major announcement.

On Monday, two hospital—Dartmouth-Hitchcock and Elliot Health Systems—announced they plan to partner with Harvard Pilgrim Health Care, an insurance company, to launch a new limited health plan for employers.

This announcement was a lot more polished than Anthem Blue Cross, who made public its plan for a narrow plan last week in front of a panel of lawmakers. Its executives were grilled over the news that their individual insurance plans would offer access to only 16 of the state’s 26 hospitals.

This time, Harvard Pilgrim and its partners were ready with a slick banner, scripted statements, and catchy title ready to go. It’s all been in the works for a while.

CEO Eric Schulz says it’s called ElevateHealth, a narrow network plan that rolls out in December.

“For all too long in the health system today, there has kind of been an arm-wrestling going on between health plans and hospitals and physicians, trying to negotiate the highest dollar or the lowest dollar,” says Schultz.

“And that has fed this volume game, if you will… how can we do more to maximize revenue?”

That changes with this model, but revenue, of course, still matters.

Three Companies To Share Risks, Rewards

Rather than negotiating, Dartmouth-Hitchcock, Elliot Health Systems and Harvard Pilgrim will share any profits.  To minimize expenses, they’ll try to coordinate patient care to keep people healthier.

And there are only 5 hospitals statewide that people can choose from.

This stripped-down offering is going to hit the market at a rate 10% less than what other employer-based plans currently cost.

Greg Marceau, a broker with Bedford-based Infantine Insurance, says businesses are hungry for anything that can lower their employee health insurance costs. But he says the savings may actually not be enough.

“The problem I see is that the 10% really doesn’t make that much of a difference,” says Marceau.

“If you have a $400 single rate [per month], or $1,600, $1,700 family rates and beyond, 10% is really just a drop in the bucket.”

"The problem I see is that the 10% really doesn't make that much of a difference."

Marceau says he imagines companies would offer the ElevateHealth plan alongside more traditional full-benefit packages, and pass the choice—and potential savings—onto their employees.

And remember, starting in 2015 under the Affordable Care Act, employers with over 50 employees that don’t offer coverage face a hefty tax.

David E. Williams, president of the Boston-based consulting firm Health Business Group, says some of those companies worried about the ACA may like this choice, too.

“Ultimately, the employer wants to offer high quality health benefits to their employees, not run afoul of the law, and still have a reasonable cost.”

Price Matters Most

Employers will have to weigh these options carefully, but Williams says most individual consumers have already made up their mind. He says the bottom line for people who have to buy their own coverage is that cost, not access, is what matters most.

“Individuals have shown when they go and actually see the difference prices, they are willing to make tradeoffs between cost and benefits, including narrow networks,” says Williams.

Individuals can’t yet buy Harvard Pilgrim’s new offering. It’s only being sold to employers in the small and large group markets for now.

But that likely changes in 2015, when the company says it will start selling plans in the new health exchange marketplaces.

That will make it a direct competitor to Anthem, that says its narrow network plan is going to be 25% cheaper than its traditional offerings.

Linda Blumberg, a senior fellow at the Urban Institute, says that in the exchange, where all the costs and benefits are clearly laid out for the consumer in one website, cheap will matter.

“What we know is that exchanges are creating a situation where there is going to be a lot more comparison information across plans,” says Blumberg. “So we are expecting people to be pretty sensitive to premium price.”

Blumberg sees an overwhelming demand for less expensive health insurance…narrow networks, she says, are just one way to get there.

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