November 7, 2012
By Rachel Hartman, InsWeb.com
Is your health insurance coverage part of a nonprofit plan or a for-profit one? Depending on the answer, you may be elated or dejected.
The top 10 health insurance plans in the country are all run by nonprofit organizations, according to survey results published in the November 2012 issue of Consumer Reports. The survey was conducted by the National Committee for Quality Assurance.
Sitting in the No. 1 position (for the third year in a row) in the survey is nonprofit Harvard Pilgrim Health Care’s HMO plan in New England. The next nine plans on the list also are nonprofits.
One of the reasons nonprofits top the charts is tied to their purpose, says Bruce McPherson, president and CEO of the Alliance for Advancing Nonprofit Health Care. “Nonprofit health plans exist solely to improve the health and quality of life for as many in their communities as possible,” he says.
The National Committee for Quality Assurance measures health care quality and offers health care accreditation. For the survey, the committee ranked 984 health insurance plans.
For-profit and nonprofit health care
Here are three key differences between nonprofit and for-profit health care.
1. Incentives vary.
For-profit organizations have obligations to their shareholders, says Dr. William Thar, a New Jersey physician who’s a spokesman for Physicians for a National Health Program. For-profit providers must report to investors and focus on profit. Nonprofits, on the other hand, do not have those same constraints. “By nature, nonprofits have to focus on benefits for patients,” Thar says. “That’s their primary goal.”
2. Nonprofits involve the community.
Nonprofits spend about twice as much on donations to the community as for-profits, according to the Alliance for Advancing Nonprofit Health Care. In addition, nonprofits are 50 percent more likely than for-profits to have physicians doing medical research.
Nonprofit health care organizations tend to have more board members who come from the communities they serve, McPherson says. This local involvement can create leadership ties that last a long time. For-profits, on the other hand, may have board members from other regions.
3. Prices differ only slightly.
Consumers may not notice a large price gap between health plans at nonprofits and for-profits. When it comes to premiums and costs, there tends to not be a big difference between nonprofit and for-profit health insurance plans, Thar says.
Choosing a health insurance plan
Here are three guidelines to follow when considering a nonprofit or for-profit health insurance plan.
1. Look at your medical costs.
If you have an ongoing condition that will require medication, consider your prescription needs for the upcoming year, suggests Katherine Woodfield Hermes, founder of www.healthcare-insurance-education.com. Also, factor in doctor visits and any other medical procedures you’re anticipating. While you can’t predict the unexpected, you can come up with an idea of what type of planned health care you’ll need in the next year. You then can keep this in mind when comparing deductibles and premiums for different health plans. The more you’re going to spend, the higher your deductible should be, Hermes recommends.
2. Know the options in your area.
While nonprofit health plans scored high on the Consumer Reports survey, many of these top-rated plans are available only in certain regions. When it comes to health care and insurance, “every state has its own set of laws and rules,” Hermes says. If you’re able to pick a health plan through your employer, examine all of the options available in your area. If you’re going to buy coverage on your own, visit your state insurance department’s website to locate plans available in your state.
3. Study the benefits and coverage.
Effective in the fall of 2012, each private health insurance plan must provide a standard form called the “Summary of Benefits and Coverage.” This form lists information such as the plan’s deductible, what type of prescriptions it will cover, and any services that won’t be covered, such as cosmetic surgery or fertility treatment.
With this form, the information in the plan is listed in a standard format, similar to the type used in a nutritional label you might see on packaged food at the grocery store.
Look for this form if you’re choosing a health plan through your job or if you’re shopping for coverage on your own. Medicare plans aren’t required to make this form available.
Top-rated nonprofit health insurers
1. Harvard Pilgrim Health Care
Plan type: HMO (health maintenance organization) and POS (point of service)
States served: Maine, Massachusetts
2. Tufts Associated
Plan type: HMO and POS
State served: Massachusetts
3. Capital Health Plan
Plan type: HMO
State served: Florida