SO YOU WANT TO START A HEALTH PLAN?: FEDERAL LAWS SUPPORTING AND UNDERMINING THE CREATION OF PSHPs

MATTHEW D. REED, J.D., 2020, Indiana University Robert H. McKinney School of Law; B.A. 2017, Olivet Nazarene University—Bourbonnais, Illinois.

The United States spends nearly twice as much on healthcare per capita than any other developed country, without providing better patient care. Healthcare quality and affordability continue to be two of the biggest concerns for Americans. Public and private actors in the healthcare industry have continuously searched for ways to decrease, or at least control, the sky-rocketing costs of healthcare in the United States, while simultaneously improving patient outcomes. Some healthcare providers believe they have found a partial solution: provider sponsored health plans (“PSHPs”).

PSHPs are health insurance plans that are fully owned and operated by healthcare providers. By controlling the entire healthcare experience—from insurance payment to care given—providers with PSHPs believe they may be able to decrease healthcare costs and improve healthcare quality. For a variety of factors, some of which will be discussed within this Note, there is a PSHP creation trend among healthcare systems: thirteen percent of healthcare systems in the U.S. already offer PSHPs, and approximately fifty percent of health systems have applied or intend to apply for an insurance license so they can consider starting a PSHP in the future. According to a study by the Atlantic Information Services, one hundred and sixty-three additional health plans offered by PSHPs entered government and commercial markets from 2013 to 2015. Also, from 2013 to 2018, PSHPs increased by thirteen percent in the small and medium business payers market, which makes up eighty-three percent of all offered health plans. Because of the current trend, today nearly fifty-two percent of insurance products are offered by health systems who operate PSHPs.

PSHPs are by no means a new invention, so the question becomes: What has legally changed to spur this trend of PSHP creation, and what legal pitfalls should healthcare providers be aware of before jumping headfirst into the health insurance industry? This Note looks to address these questions in four separate parts. Part I will provide a general overview of PSHPs by explaining how PSHPs operate, the benefits they may produce, and their history. Then, Part II will look at what laws have changed to incentivize PSHP creation. Because this PSHP creation trend seems to be nationwide in scope, this Note will focus on recent federal legal changes, although recent changes in various state laws may have also incentivized PSHP creation. Conversely, part III will look at what federal laws might pose substantial risks to PSHP creation and operation. Lastly, Part IV will suggest how a PSHP might structure their legal relationships to minimize their federal legal risks, discussed in Part III, while maximizing the benefits of PSHPs discussed in Parts I and II. This Note hopes to uncover how PSHPs are benefiting healthcare providers, what recent changes to federal law are incentivizing providers to create PSHPs, and how PSHPS can be structured to take advantage of these laws while withstanding some federal legal pitfalls which might get in the way of PSHP success. [Read entire Article here].