The New York Times reports:
Lower Health Insurance Premiums to Come at Cost of Fewer Choices
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.
When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. 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.
This government intervention in the market to attempt to control rising premiums by dictating what insurers will cover and limiting consumer choices is what Paul Krugman has described as “real market competition” in “a properly set up market system”, as I noted in a previous post. As I mentioned, Krugman praised Obamacare’s “clear ground rules”, by which
he means standardized benefit packages, with the government dictating that insurance providers reduce the variety of packages available for consumers to choose from, thus effectively outlawing competition in this regard. They all have to provide the same or similar coverage.
So we have government dictating to insurers what “packages” they can provide and the perverse incentive for insurers to hold down costs by limiting policy holders to a certain network of health care providers. Thus, if you want to go to a doctor who isn’t in the network, your insurance won’t cover it. Which hospitals would insurers seek to exclude from their networks? Why, those whose patients require the costliest treatment, of course. As the Times continues:
Daniel R. Hawkins Jr., a senior vice president of the National Association of Community Health Centers, which represents 9,000 clinics around the country, said: “We serve the very population that will gain coverage — low-income, working class uninsured people. But insurers have shown little interest in including us in their provider networks.”
Dr. Bruce Siegel, the president of America’s Essential Hospitals, formerly known as the National Association of Public Hospitals and Health Systems, said insurers were telling his members: “We don’t want you in our network. We are worried about having your patients, who are sick and have complicated conditions.”
In some cases, Dr. Siegel said, “health plans will cover only selected services at our hospitals, like trauma care, or they offer rock-bottom payment rates.”
The article isn’t without its spin. It tries to portray insurance providers seeking doctors who will accept lower pay as a positive thing:
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.”
Insurers say that with a smaller array of doctors and hospitals, they can offer lower-cost policies and have more control over the quality of health care providers.
Again, towards the end of the article, it repeats:
many insurers see advantages in narrow networks, saying they can steer patients to less expensive doctors and hospitals that provide high-quality care.
Granted, the Times presents this argument as the insurers’, but it does nothing to challenge it, despite its obvious ludicrousness. Needless to say, the idea that insurers will include “less expensive doctors” in their networks and still provide “higher-quality” care is nonsense. Why would the doctors included be “less expensive”? Why would they be willing to accept less money than a doctor not in the network. Why would a patient be willing to go to a doctor not in the network, even if that means ending up with “astronomical costs”? You get what you pay for. More expensive doctors are able to charge more for their services precisely because they provide either the same services as other doctors but with higher quality of care or they offer specialized services that aren’t available elsewhere.
The Times quotes Obama:
“Competition and consumer choice are actually making insurance affordable,” Mr. Obama said recently.
Perhaps by “recently”, the Times meant 1984. What he means, of course, is that largely outlawing competition and limiting consumer choice are supposed to help slow the rate of increase in insurance premiums.
Do you think this is going to work?