Employee Benefits

Could narrow networks be the next big cost cutter? 

In recent years you say?

Not sure how the writer of this defines “recent years,” but employers have been trying these and other strategies at least back to the early 1980s … thirty-seven years and counting. Guess what? We are still agonizing over health care costs.😰

After HMOs and high-deductible plans, employers are eyeing the next bid for value. In line: Narrow provider networks. HMOs, tiered networks, high deductible plans and moving care away from hospitals to lower-cost outpatient facilities are among the bids by payers and employers in recent years to drive quality for the best price.

Most employers haven’t pulled the narrow network lever yet despite payers finding success in the Medicare Advantage (MA) and Affordable Care Act (ACA) exchange markets. Employers move more slowly with new insurance models, but seeing effective government programs could prod them to take the leap.

Source: Could narrow networks be the next big cost cutter? | Healthcare Dive

I began managing health plans in 1961 and until around 1975 we didn’t care much about costs; they were quite modest in fact. Thereafter we “improved” the plans, negotiated added benefits, added choices, prescription drug coverage and more. We all know hat happened then and is still happening.

In the mid 1980s the direction changed. Now the game was controlling costs, shifting out-of-pocket costs to workers and raising their premiums.

And here we are still doing all the same things and more … except politicians decided that even more coverage should be added actually believing, or telling us, the changes save money. 🤪

Let’s think about this . . . More coverage, more costs, shift to less coverage and then more coverage and more costs. And through it all patients blame the insurance company 😬

The biggest mistake we make is believing that health care costs are premiums and ignoring the cost of care, the use of care and the type of care we receive … and how much of that care we cause by our behaviors.

 

Here we are making a big deal about making changes around the edges, others pushing for a single-payer system and most people having no clue about what it takes to manage health care costs.

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2 replies »

  1. We cannot forget that Doctors raised their prices, drugs have skyrocketed since 1975. New tests and new procedures have risen costs. Then we have some greedy people in the drug industry like the Epi Pens and that one drug the guy was sued for increasing the cost by hundreds. How do we control all of this? I have a friend that her doctor wanted her on a certain drug for her bones and she was retiring; she asked how much and almost fainted. That was with a co pay. Needless to say; she refused her doctor. She can’t afford that..

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  2. I am not so sure how much more narrow the networks can get. I am no longer worried about a single payer but a single provider. It use to be that hospitals in NJ were community based non-profit hospitals. There have been so many hospital chains that have been bought and sold in the last decade that it seems like there are only a handful of hospital operators left in the state. At some point this will move from getting rid of the bad owners to hospital chains that are monopolies. There will be nobody left to compare prices with and the hospitals will get to charge what they want. You can say that the state can monitor the hospitals but who will they be comparing prices and care to; the other monopolies hospitals?

    Another issue with “just narrowing the networks” is where I retired from, people lived in four different states that worked at my old site. Since the company has plants & offices in several states plus retirees living all over America, I do not know the total of the number states that would have jurisdiction over health insurance plans affecting the ability to narrow the plans. As it is now, my old employer offered about 8 health insurance plans but because of where I lived, only two were real options because the lack of the network in my area. Think about the add extra cost the company has trying to find plans that work in all the areas that its employees live. I have read that in some western states on the open market that they only have one insurer because of the small population. Not much of a choice there. You can’t get any more narrow than that.

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