With or without Obamacare, health insurance costs are on the rise. And that has businesses searching for more affordable options.
One increasingly popular option: health plans covering services provided by a relatively small number of participating doctors and hospitals. These plans are most attractive to small employers, but The New York Times reports, “Large employers, as well, are starting to show some interest, and insurers and consultants expect that, over time, businesses of all sizes will gravitate toward these plans in an effort to cut costs.”
So what’s the problem? Less expensive options to choose from are a good thing, though the Times points out that plans such as these “could come as a surprise to many who remember the repeated assurances from President Obama and other officials that consumers would retain a variety of health-care choices.”
But as Obamacare takes effect, more Americans could end up with plans that restrict their access to care due to provisions that raise premiums. Under the new law, the federal government will dictate what benefits health plans must offer. The more generous the required benefits package, the higher insurers will have to hike premiums.
Obamacare also alters public health programs in ways that drive private sector premiums higher. Expanding Medicaid means doctors will be treating more patients at Medicaid’s below-market rates. To cover their losses on Medicaid patients, physicians will have to charge their privately-insured patients even more. As the Times explains, “Even large employers, worried that the new law will result in higher prices for care as government programs pay less, are reconsidering their earlier stance.”
As Obamacare ratchets up premium prices, insurers and employers will step up their search for savings. Further restricting provider networks is one way to do this. But, as the Times reports, “some benefits consultants wonder if these plans represent any real solution to high medical costs. The narrow network, if it is based on the insurers’ ability to demand low prices, may be ‘just another short-term fix,’ warned Barry Schilmeister, a consultant at Mercer.”
Reduced costs don’t necessarily mean better value. In this case, Americans will pay less but will also receive less. Real reform would lower costs while maintaining Americans’ access to the best doctors the world can offer.