As the scrutiny on narrow networks increases, the argument by proponents focus on the inherent cost savings they bring.
Consumers are being told that less choice means lower costs. That’s got to be intuitive, right? The lack of consistency of that statement with every other consumer purchase is what health plans are going to have to explain. Why is it that in any other consumer purchasing experience, the increase in selection equates to increase in competition and therefore lower price, but in health care the opposite is argued? And this answer is of critical importance because, as a new study from Dobson and DaVanzo shows, while overall costs of care have decreased, the portion paid by consumers has steadily gone up. So consumers, who know they are paying for a significant portion of health care, will want to understand why less choice means lower cost. The pundits argue that narrowing networks creates an opportunity for reduced fee schedules because the payers get a bigger discount. And most consumers understand that. They can see that Lowes or Home Depot might have a special deal with Westinghouse or GE and favor their brands in exchange for a lower price point than the competition’s. But that doesn’t mean choice is restricted, it simply means that the price paid for the specific product might be higher than that of another product and at any point in time, the consumer is free to choose which product to buy. And the failure of the analogy in health care is that much like in the days of HMOs, we’re confusing the annual purchase of health insurance with the occasional purchase of health services.
What this means to you
As the old saying goes, if the only tool you have is a hammer, then every problem looks like a nail. Think tanks like the U of M’s Center for Value-Based Insurance Design have published thoughtful reports on the effect of clinically nuanced plan designs. These plan designs bring a whole new set of tools to solve the problem of better matching supply and demand of services at the point of need. Similarly, transparency tools have started to create more sensitivity about the differences in prices for specific services. At some point, they will likely show plan members what’s really important, the estimated price of an episode of care. These tools combined with more nuanced benefit designs will have a significant effect on matching providers with plan members, without resorting to the narrow network hammer. In fact, they could do that today if more health plans were willing to deploy them and experiment with the incremental effect of benefit changes. Much like in the days of HMOs, the backlash against narrow networks will slowly but surely build because the fundamental premise that less choice means lower cost simply flies in the face of every other consumer purchasing experience. The task at hand is not to try and sell an unsellable message, but rather to test new methods that will, in effect replicate that every day experience. Some are engaged in that process, but many more need to join the fray and publicly acknowledge that the choice of the current hammer is very insufficient and that other tools will likely build a stronger base from which to offer more affordable premiums and cost-sharing for all Americans.