A study based on a review of health insurance options offered by the largest insurers in the state found that benefits and prices vary widely and recommends that consumers compare options carefully.
According to a new report by the California HealthCare Foundation (CHCF), an average, healthy 44-year-old living in Los Angeles might pay between $69 and $573 a month for health insurance, depending upon the type of health plan chosen.
Based on a review of health insurance options offered to individuals by the largest insurers in the state as of spring 2002, the CHCF study found that benefits and prices vary widely and recommends that consumers compare options carefully.
"Prices vary considerably even when benefits are comparable," said Marian Mulkey, CHCF program officer.
The study looked at individual plans offered by Blue Cross of California, Blue Shield of California, Health Net, Kaiser Permanente, and PacifiCare in six California counties: San Diego, Los Angeles, Fresno, San Francisco, Sacramento, and Shasta. Depending on where a person lives, up to 31 options might be available and the price of the most expensive option might be from 7 to 11 times higher than that of the least expensive alternative, according to the report.
"Price differences reflect the very broad range of available benefit packages," said Mulkey. "But prices also vary for reasons unrelated to the level of coverage, so consumers can't rely on simple rules of thumb when comparing options," she added. The report notes that each health plan's cost structure and marketing strategy can influence the prices charged in a given community.
Health plans offer a wide array of plans, benefits, and price points in order to appeal to the preferences of individuals who differ by age, financial circumstances, and personal values. According to the report, the options might "be confusing and hinder well-informed choices."
Policymakers could make it easier for consumers to make apple-to-apple comparisons between plans if insurers were required to offer some standardized benefit packages, the report suggests.
Using the example of a healthy 44-year-old living in Los Angeles, the report revealed that available comprehensive HMO options range in price from $189 to $305 a month, a 61 percent difference. Comparing the rates for available low-benefit plans (a PPO option with a $1,500 deductible, for example), monthly prices ranged from $187 to $202, a difference of 8%.
Across all six counties studied, the average price spread between the lowest- and highest-priced comprehensive HMO plans was 71%. The average price spread for $1,500-deductible PPO plans was 17%.
The biggest price spread was in San Francisco with a 114% variation for HMOs and a 24% price spread for PPO plans.
When comparing health plans, the report advises consumers to:
- Look for differences in the benefits likely to impact them, such as maternity coverage, behavioral health, or other specialty services.
- Consider the breadth of the provider network, particularly the difference between Kaiser's network of its own physicians and hospitals versus the community network of physicians and hospitals offered by other plans.
- Assess affordability and financial risk based on both the fixed monthly premium and out-of-pocket costs that vary based on actual use of services.
While this study focused on benefit plans and prices for an individual shopping for a non-group plan, the same challenges apply to a family seeking coverage in the non-group or individual market.
Research for this report was conducted by a team led by Joan B. Trauner, Ph.D., a San Francisco-based independent consultant.
The full report can be found through the link below.
About the California Health Care Foundation
CHCF is dedicated to advancing meaningful, measurable improvements in the way the health care delivery system provides care to the people of California, particularly those with low incomes and those whose needs are not well served by the status quo. We work to ensure that people have access to the care they need, when they need it, at a price they can afford.
CHCF informs policymakers and industry leaders, invests in ideas and innovations, and connects with changemakers to create a more responsive, patient-centered health care system.