Less Choice, Less Cost

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Since comprehensive health care reform legislation was signed into law by President Obama earlier this year, few of the act’s major provisions have actually gone into effect. (Possibly the most prominent change already in place is that health insurance rates for children may no longer take preexisting conditions into account.) But in anticipation of rules that will go into effect years from now, health insurance companies are already making changes.

A recent New York Times article profiles one experiment under way in many insurance companies: developing plans that severely restrict what doctors patients can see. Anticipating the health act’s requirement that nearly all Americans without health coverage purchase it by 2014, and the tax incentives that will simultaneously encourage businesses to purchase coverage for their employees, insurance companies are expecting new demand for low-premium coverage among both individuals and employers that previously did not buy insurance. Since the new law restricts certain ways to reduce the cost of plans that will be sold in state-run insurance exchanges — for example, there are limits on how high a deductible can be — restricting which doctors patients can see is one of the few tools immediately available to insurers to significantly lower their premiums. One plan typical of the new model, offered by Aetna in New York, restricts its network to about half as many doctors and two-thirds as many hospitals as in the company’s regular plans. Insurers believe it is crucial that they start operating these plans now, to gauge how well they work and how satisfied consumers are before demand for such plans potentially reaches its peak.


It seems likely, however, that these plans will have effects beyond the previously uninsured at whom they are targeted. Large companies that already offer coverage, looking to cut costs, are showing interest in the new plans. According to an insurance executive interviewed for the Times article, companies may be able to reduce their premiums by as much as 15% by switching to the new plans. In most plans sold to businesses under the new model, employees must pay all expenses out-of-pocket if they see a doctor outside the network. Insurers say, however, that they are working on designing restrictive plans in which they still pay a portion of the bill for out-of-network doctors. It is expected that the new model of plans will be most popular among businesses with young employees, who tend not to see a doctor often anyway.

Although the new plans were developed to contain the cost of care and therefore premiums, it is not known whether such an effect will still be possible if such plans become mainstream. After all, doctors and hospitals deemed by insurers to be low-cost — based not just on fees charged, but on other data such as surgical recovery rates — are a limited group that cannot treat everyone in the country with insurance. Eventually, insurance companies would have to cap the level of enrollment in restrictive plans, or make the plans less restrictive and therefore more expensive. They could also switch to plans with tiers of doctors, something already being done by UnitedHealth for a collection of school districts in and around San Diego. If tiered plans became mainstream, however, it is possible that low-cost doctors, clinics, and hospitals would be overrun with patients — or have to turn them away.

What do you think — would you be interested in a lower-cost health insurance plan with greater restrictions on what doctor you could see? If your employer decided to switch to such a plan, would you pay out-of-pocket if necessary to see your favorite doctor? Is it good for insurance companies to encourage seeing doctors that, in their judgment, offer high-quality care for a lower price? Should consumers pay more to see doctors who charge more but don’t provide statistically better outcomes? Leave a comment below!

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