Wednesday, September 25, 2013

Two sides of a coin, or TANSTAAFL

Economists like to say that there is no such thing as a free lunch, or TANSTAAFL, and this phenomenon is showing up in the rates to be charged for new health insurance products that will be offered by exchanges across the US.  Harris Meyer at Modern Healthcare reports:

An eagerly awaited report by HHS released Wednesday on health plan premiums and participation in the 36 states where the federal government is fully or partly running the new insurance exchanges shows that consumers in most of those states will have many plans to choose from and that premiums will be significantly lower than expected in 2014.

The new HHS report, combined with previous reports from states running their own exchanges that showed similar results, bolsters the Obama administration's case that the Patient Protection and Affordable Care Act is achieving its goal of fostering competition in the health insurance marketplace and producing affordable premiums for consumers. 

But now look at a report by Robert Pear in the New York Times:

Federal officials often say that health insurance will cost consumers less than expected under President Obama’s health care law. But they rarely mention one big reason: many insurers are significantly limiting the choices of doctors and hospitals available to consumers. 

From California to Illinois to New Hampshire, and in many states in between, insurers are driving down premiums by restricting the number of providers who will treat patients in their new health plans.  

To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those health care providers will, in many cases, be paid less than what they have been receiving from commercial insurers. 

Consumers should be prepared for “much tighter, narrower networks” of doctors and hospitals, said Adam M. Linker, a health policy analyst at the North Carolina Justice Center, a statewide advocacy group. 

“That can be positive for consumers if it holds down premiums and drives people to higher-quality providers,” Mr. Linker said. “But there is also a risk because, under some health plans, consumers can end up with astronomical costs if they go to providers outside the network.”

None of this should be surprising.  As I have mentioned many times:

The logic and need for universal coverage of the population is incontrovertible, and it needs to proceed. But as I said many, many months ago, when the President promised the nation access, choice, and lower costs, he was misleading us.  You get two out of three, not all three.

But the President's decision to hedge this issue during the legislative battle on the act is nothing compared to the cruelty and stupidity of those governors who have decided to deprive their Medicaid-eligible residents of the opportunity to participate in the federally funded health care insurance subsidies under the new law.  And those in Congress who are holding up the national budget and debt ceiling by trying to defund the act are likewise cruelly rolling the dice on the national and world economy by their sore-loser approach to what is supposed to be the approach to compromise in a republican form of government.


Barry Carol said...

While I’m a big supporter of both narrow networks and tiered networks to both hold down insurance premiums and create countervailing power against large hospital systems and famous academic medical centers with significant market power, I wonder about the treatment choices that will be available to patients who need sophisticated cancer treatment, an organ transplant or complex surgery. Do these narrow network plans include any academic medical centers at all? Also, what happens if you wind up in a non-network hospital in an emergency situation or in a network hospital but are treated by non-network doctors?

Anonymous said...

Reading about all the brouhaha over this law and other changes in health care over the last several months convinces me of the truth of that statement attributed to Churchill - Americans always do the right thing, after they have tried everything else.


Anonymous said...

most plans I have seen, maybe because I live in massachusetts, allow patients to go outside the their limited or tierred networks for emergency situations.

can't speak for all regions, but in massachusetts we are "blessed with too many" academic medical centers some of which are much less expensive than MGH, B&W and Childrens.

I would have to believe that networks will be designed to provide 95% plus of health procedures in network, and for those few cases when you have to go out, a provision is made for that....

Nancy Thomas said...

The discussion reminds me of the network established by Harvard Pilgrim Health in RI many years ago. It was a closed system, HMO, if you will. But - as soon as something was complicated or specialized - they readily referred you out of network or to Boston. We're watching these mini closed systems be established in RI, and yes, where is patient choice - to go to a small independent hospital or to go to a specialized center of care in another state?

Mitch said...

I think the public waking up to narrow networks and limited choice is necessary and was going to happen one way or another anyway; it is one of the few things that demonstrably lowers costs. And I think despite the to-be-expected grumbling consumers will adjust fairly quickly. They already do in brick and mortar retail, where they can shop anywhere but by necessity choose Wal Mart.