Quote-of-the-day mailing list
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Subject: qotd: The second managed care revolution
Date: Thu, 24 Jan 2013 14:26:18 -0800
From: Don McCanne <firstname.lastname@example.org>
To: Quote-of-the-Day <email@example.com>
Kaiser Health News
January 22, 2013
HMO-Like Plans May Be Poised To Make Comeback In Online Insurance Markets
By Julie Appleby
It's back to the future for insurers, which plan to sharply limit the
choice of doctors and hospitals in some policies marketed to consumers
under the health law, starting next fall.
Such plans, similar to the HMOs of old, fell into disfavor with
consumers in the 1980s and 1990s, when they rebelled against a lack of
But limited network plans -- which have begun a comeback among employers
looking to slow rising premiums -- are expected to play a prominent role
in new online markets, called exchanges, where individuals and small
businesses will shop for coverage starting Oct. 1. That trend worries
consumer advocates, who fear skimpy networks could translate into
inadequate care or big bills for those who develop complicated health
Because such policies can offer lower premiums, insurers are betting
they will appeal to some consumers, especially younger and healthier
people who might see little need for more expensive policies.
Insurers, who are currently designing their plans for next fall, "will
start with as tight a network control as they can," says Ana Gupte, a
managed care analyst with Sanford Bernstein.
Plans may also benefit from offering such policies because they are less
attractive to those with medical problems, who can no longer be turned
away beginning in January 2014.
Driven by consumer and employer demand for lower-cost plans, insurers
are already rolling out narrow network policies that have shaved
premiums 10 percent or more. A recent survey by benefit firm Mercer
found that 23 percent of large employers offered such plans this year,
usually among a choice of plans, up from 14 percent in 2011.
Many policies that currently offer a limited network of doctors and
hospitals generally allow patients to go to out-of-network providers,
with whom they do not have negotiated prices. But patients who seek such
care face significant co-payments, which often start at 30 percent of
the bill and can go as high as 50 percent.
It is often hard for consumers to figure out how much they might be
charged if they go out of network, says Lynn Quincy, senior policy
analyst at Consumers Union, publisher of Consumer Reports magazine. In
addition to meeting separate annual deductibles for out-of-network care,
patients can be "balance-billed" by doctors or hospitals for the
difference between what the insurer pays them and their total charges.
That doesn't change under the federal health law, so consumers could be
left on the hook for tens of thousands of dollars.
Comment: So we didn't get single payer, but at least we got a bill that
brought us an end to insurance company abuses, so they say. But did we
Most people purchasing plans through the insurance exchanges will select
plans with lower premiums which means the bronze and silver plans that
have actuarial values of 60 or 70 percent. To achieve these low values,
the plans will require large deductibles and other cost sharing -
expenses that may not be affordable for many who actually need health care.
This article and others have reported on the strategy of insurers to
rely more heavily on "narrow network" plans - plans that greatly limit
your choice of health care professionals and institutions. Obtaining
care outside of the network can result in greater cost sharing plus
balance-billing for charges that normally would be disallowed. Current
networks are already restrictive enough, but these new super skimpy
networks will leave patients even more dissatisfied than they were at
the peak of the managed care revolution. And we thought we got away from
Although insurers would be prohibited from deliberately excluding more
costly, sicker patients, the very design of these plans motivates the
healthy to buy them and the sick to shun them. Thus cherry picking and
lemon dropping will still be with us, even if not overt.
Can you imagine the celebrations in the board rooms of the insurance and
pharmaceutical firms? Officers and directors dancing around the table
Don McNeill-style, singing, "Happy days are here again!"