Higher Deductibles + Narrow Networks = Patients Worrying about $$ and Delaying Care

According to a new survey by the National Business Group on Health, as of next year, more than a third of companies intend to offer only a high-deductible, “consumer directed” plan to their workers, sometimes along with a health savings account.

To exacerbate this situation, narrow and tiered network plans also have proliferated since the advent of the Affordable Care Act, now affecting about one-fifth of employees. If a patient in one of these plans wants to continue receiving care from their current physician(s), they are required to potentially find care outside their network or at a higher level tier, therefore spending more.

Dating back to the 1980s, insurers have created products that stratify physicians and other providers into tiered or narrow networks based primarily on cost of care. Francios DeBrantes of the Health Care Incentives Improvements Institute points out in a recent article that consumers are being told that less choice means lower cost in health care.

So, why is it that in any other consumer purchasing experience, more choices mean greater competition and therefore lower price, yet in health care the opposite is (allegedly) true?

In a recent study, the authors have shown that while overall costs of care have decreased, the portion paid by consumers has steadily gone up. Supporters argue that narrowing networks creates an opportunity for reduced fee schedules because the payers get a bigger discount.

As customers, we all understand that if a large national store strikes a deal with a washing machine manufacturer and buys that brand in exchange for a lower price, we’re still free to either buy the cheaper machine or to choose another brand. It doesn’t mean the consumer’s choice is restricted. It simply means that the price for a specific product might be higher than another product at any point in time.

Francios DeBrantes in his article notes that “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.”

The Pennsylvania Medical Society has already suggested, through our comments on Healthy PA,
a letter to the Governor, and participation on the Joint State Government Commission Advisory Committee on Physician Shortages, that the state should establish a task force to review current network adequacy standards in Pennsylvania and to study issues associated with matching supply and demand of services at the point of need using transparency tools as an example.