HMOs will dominate plan offerings on exchanges in 2017

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The majority of health care plans available on the Affordable Care Act’s insurance exchanges in 18 states will be health maintenance organizations, according to a new analysis by McKinsey & Co.

Among all plans, the study said 75 percent will be some sort of narrow network managed plan design: 62 percent will be HMOs and an additional 13 percent will use the exclusive provider organization (EPO) design. Broader network plans will be harder to come by: 17 percent of plans in the studied states will be paid provider organizations (PPOs) with another 8 percent utilizing point of service (POS) designs.

It’s a big shift from 2016, when nearly half (49 percent) of all plans were HMOs, and 28 percent were PPOs.

For competitively priced plans, which McKinsey defined as “priced within 10 percent of the lowest price plan in the same metal tier and rating area,” managed plans will make up an even greater slice of pie in 2017: 84 percent of plans in the 18 states will be HMOs or EPOs for 2017.

In 2014, when the exchanges were first open, the split among competitively-priced plans was smaller, with HMOs and EPOs making up 61 percent of plan offerings and the remaining 39 percent coming from unmanaged plans.

A separate McKinsey report released in May said HMOs have been better than PPOs at containing their losses on the exchanges. The new report said that’s led to lower premiums for those managed plans, with their median increase in the lowest-priced plan in the silver tier set to go up by 9 percent between 2016 and 2017. For unmanaged plans, the median increase will be 18 percent.

The current study also looked at the prevalence of managed care plans among different types of carriers on the exchanges, and for each, narrow network plans are becoming the norm. The greatest increase has been among carriers who offer coverage in four or more states: in 2015, 46 percent of their plans were HMOs or EPOs. In 2017, 97 percent of their plans will use a managed care design.