For most people, choosing a health plan starts with practical questions: What’s covered? Which doctors are in-network? How much will it cost? Those considerations matter, but they don’t tell the whole story. 

Health plans play a central role in shaping the health care system. While many plans may look similar on the surface, their underlying purpose and structures differ in very meaningful ways. Not-for-profit and for-profit health plans operate with distinct priorities that influence how resources are used and how care evolves over time.

Understanding those differences offers insight into how health plans make decisions — and why those decisions matter for communities. 

Two model types, two different priorities

There is a stark difference between not-for-profit and for-profit health plans. Not-for-profit plans, both in New England and nationally, are essential for providing affordable, high-quality, equitable care. Many not-for-profit plans are community-focused safety nets, particularly for vulnerable populations. What happens to any surplus revenue? Not-for-profit plans reinvest those funds back into the organization, supporting member benefits, strengthening care delivery, funding community health initiatives, and building the infrastructure needed to address long-term health needs. For not-for-profit health plans like Harvard Pilgrim Health Care and Tufts Health Plan, 90 cents of every premium dollar received from members and employer customers go directly to their medical care. The remaining is spent on administrative costs, and, in more profitable years, there is a razor-thin margin to reinvest back into the business and communities. Their success is measured not by shareholder returns, but by how effectively they serve members and communities. 

For-profit plans, by contrast, are accountable to shareholders and investors. Financial performance and returns play a central role in how priorities are set and how capital is allocated.

These differences reflect distinct operating incentives, not differences in intent or quality of care. Over time, those incentives influence whether an organization takes a longer-term view — investing in prevention, stability, and systemwide improvement — or focuses more heavily on short-term financial performance. In health care, where the benefits of prevention and equity often unfold over years rather than quarters, that distinction matters. 

“Not-for-profit health plans are critical to the health care ecosystem,” says Kristin Lewis, executive vice president and chief public and community affairs officer of Point32Health, the parent company of Harvard Pilgrim and Tufts Health Plan. “As a not-for-profit, we don’t have shareholders; our members are our shareholders, and they are at the center of everything we do. And unlike many for-profit health plans, our work is our purpose: to guide and empower healthier lives.”

Prioritizing community health 

One of the clearest expressions of a not-for-profit health plan’s mission is the way it invests in community health. Through philanthropic foundations, a not-for-profit’s mission extends beyond coverage by investing directly in the social and economic conditions that shape well-being — funding community partnerships, supporting local organizations, and backing initiatives that address the root causes of health disparities. This approach centers on collaboration, connecting with organizations that are already leading efforts to strengthen their own communities.

For Point32Health companies Harvard Pilgrim and Tufts Health Plan, that commitment comes to life through the Point32Health Foundation, which partners with community organizations to tackle the social and structural factors that influence health every day. Since 1980, the Foundation has invested more than $283 million to support community organizations in Massachusetts, Maine, New Hampshire, Rhode Island, and Connecticut — the same communities where Harvard Pilgrim and Tufts Health Plan members live and work. Guided by extensive community listening, the Foundation supports community-led initiatives to expand access to nutritious food and stable housing, strengthen social connections, support caregivers, and improve transportation and mental health resources. 

“Health is shaped by far more than what happens in a clinic or hospital,” says Lewis, who also serves as the president of the Point32Health Foundation. “By working alongside community organizations, we’re able to address the social and structural factors that influence health every day.”

This kind of engagement underscores that health plans are participants in a broader health system, not just financial entities.

Turning evidence into action

Another way not-for-profit health plans differ is in their approach to research. Just as the Point32Health Foundation invests in the social and structural factors that shape community well-being, not-for-profit health plans also invest in the evidence needed to improve care over the long term. Research helps identify health interventions that work, where gaps exist, and how care can be delivered more effectively and equitably. When research is embedded within a health plan, it is generated with real-world populations in mind, informed by the challenges health plans encounter every day. Those insights can be applied more quickly to benefit members and communities.

That model is central to the work of the Harvard Pilgrim Health Care Institute, a research and teaching organization based within Harvard Pilgrim Health Care and affiliated with Harvard Medical School. Founded in 1992, the Institute was designed from the start to bridge academic research and health care delivery. Today, its positioning as part of Point32Health allows researchers to study how policies and interventions affect people in real time — and to translate those findings into care delivery and decision-making. 

Choices that affect care

The structure behind a health plan may not be common knowledge to most people, but its effects are felt every day. It shapes whether resources are reinvested locally, and whether decisions are guided by short-term returns or long-term health outcomes. Those choices influence the strength of local systems, the availability of community resources, and the experience of the people who rely on them.

For individuals and families, choosing a health plan should always involve practical considerations. But taking the time to look at the organizations behind those plans can offer a deeper understanding of their impact — on communities, on long-term health, and on the members who are part of those communities.

Harvard Pilgrim Health Care, a Point32Health company, provides nationally ranked health plans and care-based programs and services to nearly 900,000 members in New England and beyond. Founded by doctors more than 50 years ago, it builds on that legacy and partnerships through an expansive network of doctors and hospitals nationwide to improve health outcomes and lower costs through clinical quality and innovative care management. A leading, not-for-profit health and well-being company, Harvard Pilgrim Health Care guides members — and the communities it serves — to better health each day.