In Health Care, Sometimes It’s Provider Choice vs. Price
This was published as a Wall Street Journal Think Tank column on May 20, 2014.
Some people who don’t have strong ties to doctors or hospitals seem willing to accept narrower networks of providers in return for lower prices. In other words, unlimited choice of doctors and hospitals may not always be the third rail in American health care it once was.
The Kaiser Family Foundation’s February Health Tracking Poll asked people with employer-based coverage if they would choose a plan that cost them less money but had a more limited range of doctors and hospitals. Only 34% said yes. About the same share of the public overall–37%–said the same thing. But among people who buy their own insurance in the non-group market or are uninsured, more than half–54%–said they would accept more limited choice to get a lower price.
Many people who are uninsured or who bounce from plan to plan every year in the non-group market may never have had a regular doctor or hospital, and the uninsured may be more worried about paying for health coverage that they are now legally required to buy than about having a broad choice of providers. Often, the price difference between broad- and narrow-network plans is substantial. A McKinsey study put it at 26%. It can be even larger.
When people already have a doctor or hospital they would be forced to give up, their support for narrow networks drops sharply. Policymakers, insurance companies or employers should not think they have free rein to take away people’s current providers to reduce costs. Good policy and good medical care also require an adequate mix of primary-care physicians, specialists and hospitals in every insurance network. Networks need the right providers too; trauma centers for accidents, children’s hospitals and pediatric specialists, etc.
Would you trade a broad network for a narrower one that costs 25% less? Most likely, you would want to know which doctors and hospitals are in the network, something that isn’t always easy to determine when shopping for insurance today. There are too many stories of people being surprised: They think that they have checked things out and that, for example, their surgeon and hospital are in-network, but then some discover too late that the anesthesiologist was not. Such instances are hard to prevent.
Still, people who don’t have strong provider ties and are worried about paying for health insurance may be more open to the trade-off between price and provider choice in narrower networks. It will be up to government to ensure that people who opt for narrower networks to get a lower price still have adequate services available to them.