ObamaCare Health Insurance Has “Networks”. But Why Are There Any Networks At All?
Last month, Julie Appleby of Kaiser Health News, reported on a presentation by Paul Mango of McKinsey & Co. to an audience of health-insurance executives. According to Appleby’s report, Mr. Mango’s research found:
- About two-thirds of hospital networks on the exchanges are “narrow” or “ultra-narrow”;
- This was defined by surveying 20 urban areas and identifying the 20 biggest hospitals in each area;
- An insurer with at least 15 hospitals in network have a “broad” network; those with 7 to 14 hospitals have a “narrow” network; and those with 6 or fewer hospitals have an “ultra-narrow” network.
Furthermore, Appleby reported that Mango’s research concluded that the “narrow” and “ultra-narrow” network plans did not always have the lowest premiums. Nevertheless, “broad” network plans have premiums 26 percent higher than the plans with smaller networks, according to Appleby’s report.
The point of this blog entry is to discuss why health insurers have networks at all. However, before we get to that, I would like to emphasize that the previous paragraphs specify “Appleby’s reporting of Mango’s research” and not “Mango’s research” itself.
This is because there is no publicly available document which contains Mango’s analysis. During my efforts to track one down, a source informed me that a document exists, titled Hospital Networks: Configurations on the Exchanges and Their Impact on Premiums, which was finalized by McKinsey on December 14, 2013. However, my source told me that the document is “confidential and proprietary” and that “any use of this material without specific permission of McKinsey & Co. is strictly prohibited”.
So, I ceased my efforts to lay my eyes on the source document. I have no reason to cause trouble for McKinsey & Co., and they have gotten in trouble with the Administration before. Back in June 2011, McKinsey & Co. were attacked on the White House blog for having published a report concluding that ObamaCare would result in a significant loss of employer-based health benefits (as discussed by Avik Roy).
Today, of course, ObamaCare’s destruction of employer-based benefits is accepted by everyone, and even admitted by President Obama himself. So, if Appleby’s reporting of Mango’s new analysis is accurate, we should accept it as the first systemic analysis confirming anecdotal evidence that “ObamaCare” is actually “Obamacaid”, and those who are driven out of employer-based benefits into the exchanges will find limited access at higher cost than before.
Nevertheless, the issue raises a bigger question: Why do health insurers have networks at all? Auto insurers have preferred auto-body repair shops, but it’s not quite the same thing. You may think that your auto insurer has comparative advantage over you in determining the quality of work at a particular shop. However, you can go to any shop, get an estimate, and report it to your insurer. By default, most auto insurers pay the insured party (or lien holder), unless the insured party directs the insurer to pay the repair shop directly.
Most importantly, there are no huge cost surprises after the repair. For hospitalization, it can take months or years to figure out how much a discharged patient owes, largely because has been impossible to get a good-faith estimate of a scheduled procedure before admittance.
Slowly, this is starting to change for the better. Earlier this year, John Goodman reported results of “reference pricing” for certain hospital procedures. Large groups like WalMart, Safeway, or CALPERS identify hospitals that provide high quality procedures, e.g. joint replacement, at low cost, and commit to paying that fee and no more for the standard procedure. However, patients are free to go to another hospital if they pay the difference. Of course, prices at other hospitals came down very quickly.
Insurers are cautious of this because they benefit from the opaqueness of network contracting. CALPERS reference-pricing program was designed by Anthem Blue Cross, but it is not a general feature of Anthem Blue Cross offerings in California.
Because most Americans do not observe the true cost of health insurance, they find it difficult to appreciate the benefits of this price transparency. A post-ObamaCare reform that gives individuals choice of their own health benefits will quickly make insurers’ networks less important, and cost and quality more important.
“Of course, prices at other hospitals came down very quickly.”
OOh, try to act surprised.
What? Competition and open information led to lower prices for equivalent products? Color me surprised.
Allowing people to make their own, informed decisions – especially on something as important as health care – is the best way.
“Because most Americans do not observe the true cost of health insurance, they find it difficult to appreciate the benefits of this price transparency.”
They ignore the prices, they look at only what comes out of their pockets.
In the end, isn’t that what’s important? The impact on the individual?
“A post-ObamaCare reform that gives individuals choice of their own health benefits will quickly make insurers’ networks less important, and cost and quality more important.”
Yes. Individual choice is always the way to go.
This plan isn’t the cure all, some autobody shops are still sketchy. Just as some hospitals would be
“Mango said his group also analyzed enrollment data, finding that signups in four states — California, New York, Florida and Washington — make up about half of all enrollees and they tend to be older, rather than younger. The mid-level silver plans appear to be the most commonly chosen by consumers.”
These are the problems House republicans have been stressing about
“Most importantly, there are no huge cost surprises after the repair.”
Maybe not for a car, but it’s easier to predict how a car will take to something than the human body. We can’t plan for everything.
Perhaps not. But you can provide accurate prices for procedures you know the patient is going to need. That way, the individual at least has a baseline to start with, and it won’t take as long to get accurate total costs.
A baseline isn’t good enough, without set prices the system will never be concrete.
At least with set prices, you would be able to weigh the costs and benefits of a procedure more accurately.
You will never know with certainty what the price will be because of complications with the procedure. A baseline should be be good enough.
Is anyone concerned that we can’t see the original report? That’s a little strange.
Obviously something to hide
What should happen is that all providers can choose any amount to charge, BUT, they must charge everyone this price and it must be published on their website (or repository if there is a price comparison engine). They should also charge “package” pricing on standard procedures (so that it includes all services). Of course Medicare and Medicaid make this practically impossible, but it would be a start. Otherwise all insurance companies could reimburse at Medicare rates. Simple easy, transparent for most items. Premiums and costs would come down in most instances.
There is no business in America that charges for products and services in that manner. Why should health care providers be restricted to charging a single price posted on a website.
Airfares vary from person to person. On a plane you may sit next to a guy who paid more for his seat than you did. It is based on how flexible he is and when he bought his ticket. See the following (just for illustration)
http://voices.yahoo.com/why-plane-tickets-vary-so-widely-price-5291241.html
How about the old two for the price of one volume pricing? Shouldn’t that apply to health car too? Of COURSE it should. So, if you get a group together, maybe a health provider will also give you a VOLUME price. Non-group members don’t deserve that price.
Why should health providers be required to offer a single bundled price? Restaurants offer a la carte menus and that is considered OK. Some restaurants offer prix fixe menus too, but I bet if providers did that you would demand an itemized list to make sure you only paid the “cost” of the service.
When people buy managed care (ACA is NOT insurance it is managed care) they have hired experts to NEGOTIATE on their behalf and direct them to providers who have negotiated a price. That is the managed care companies FUNCTION. Since the shopping has already been done (for a fee by the managed care company) all that is left is to ACCESS the benefits to which the contract says I am entitled by virtue of my premium payment.
Post a price and adhere to it is a simpleton concept that doesn’t occur in any market. Even the stock market, the closest example of a perfect market, has constantly varying prices.
You are so wrong, Jake Speed. The stock market famously publishes its prices. Amazon and eBay compete in an open market.
Do you want to find out what you sill pay for a colonoscopy or cataract surgery?
HaHa. I can call to Hungary, Thailand, India, Costa Rica, Brazil and Mexico and be quoted a price. It would take me FOREVER to get a price here in the USSA. Everybody including the gummint, hospitals, clinics, docs, and facilities, not to mention drug vendors, does everything he can to HIDE all the information.
If Walmart or Amazon ran health care in this country, you might see an open market for the FIRST TIME. [I like your ALL CAPS thing.]
No, you intentionally missed the point. Every transaction on the stock market is reported AFTER it occurs. Requests to sell or purchase pass through brokers and market makers.
If I have 200 shares of ABC I wish to sell, I can sell 100 shares at $10 in one instance and sell the other 100 at $20 – simultaneously! I don’t owe the $20 purchaser the “benefit” of the $10 sale the “other guy” successfully bid upon.
On discovering what I must pay for out of pocket for a procedure, when I asked the surgery center for an estimate of my surgery they came extremely close to my actual costs. So, based on my experience, I would say merely furthering a misconception/rationalization held by those too lazy to ask BEFORE the procedure is provided.
If Walmart ran healthcare, your implants would come from China. On Amazon, you would be forced to read your consent forms on a “must buy” kindle and prescriptions would come with a PayPal translation fee.
You should not take my criticism of “posting a price and adhere to it” as a defense of managed care. Personally, the way to address this is to have insured persons pay out of pocket to hospitals, physicians and others, to have the insurance company then pay the insured persons when the person sends in a claim. If you want the price of health care services to have meaning to the public, the public must actually pay for the services. Right now the price of insurance matters because people pay premiums. Health care is the benefit they have already bought. The public won’t shop AGAIN for something they have already purchased through managed care.
My healthcare network is worldwide, because I pay cash. Not only that, but I pay from 1/9 to 1/2 what USSA healthcare providers charge for the very same procedure. Here’s what I was quoted for standard pre-op procedures in Rio de Janeiro:
– Hemogram complete – $12
– Coagulogram – $24
– Glucose – $5
– Urea – $5
– Creatinine – $68
– Eletrocardiogram – $12
– X-Ray (thorax) – $18
Amerkians who willingly participate in Obamacare or in the USSA medical system are fools.
Report found here:
http://www.google.com/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=1&cad=rja&ved=0CDYQFjAA&url=http%3A%2F%2Fwww.mckinsey.com%2F~%2Fmedia%2Fmckinsey%2Fdotcom%2Fclient_service%2Fhealthcare%2520systems%2520and%2520services%2Fpdfs%2Fhospital_networks_configurations_on_the_exchanges_and_their_impact_on_premiums.ashx&ei=aYvNUtbgA7HisASFvYLQDA&usg=AFQjCNHMQoGKqvsoKkQrFzpN7A1i_P8pvQ&bvm=bv.58187178,d.eW0
Your “report” is Malware.
Two possible reasons for networks:
a. Some prominent hospitals might refuse to participate in reference pricing. Per Nate Ogden this is the case.
b. Health plans always want to discourage people with expensive illnesses from signing up with them.
This used to be done straightfowardly with underwriting.
Now the plans need a variety of less direct techniques.
It’s time to bring the XP Pro notebook into
the network. Business class Vo – IP maintains a high QOS and technological advances in
IP telephony transportation have made Internet calling as
good as or better than normal PSTN connections.
The Valet supports guest networking, a convenience only found in the Linksys E1000 and the ASUS RT-10 EZ
N.
My weblog – Virtual Router
Good day! Do you use Twitter? I’d like to follow you if thaat would be okay.
I’m undoubtedly enjoying your blog andd look forward
tto new updates.
Check out my web-site – heroes 3
With the modern methods of bait delivery via spod rockets and ground bait launchers and bait boats and all the rest
you do not need to make round boilies ever again (and using totally uniquely-shaped
baits will catch you far mare big fish. the Bureau of Land Management, and Geological Survey.
In reality, Crist’s penchant for “systematically turning his back on things in which he has claimed to believe” is hardly “recent.
Here is my homepage – deer hunter 2014 hack tool no survey no password