In 1992, the story of President Clinton’s election boiled down to an in-house phrase that became a mantra to the staff – "It’s the economy, stupid." It helped the campaign center on what they felt was the single, important issue facing the electorate.
Now the healthcare provider industry is facing the challenge of having the public select networks for its healthcare coverage. However, the reality of these choices may not be so obvious. Yes, the exchanges have a tiered approach in terms of levels of coverage, but the names of the participating provider networks may not be obvious. The expectation is that quality is already baked into all of the exchange selections – so where is the focus? Price.
What did we learn from Medicare part D? It was about price as the seniors voted with their feet in overwhelming numbers when faced with the lower-priced generic option. As a result, the cost of implementing Part D was significantly less than predicted.
Now we have the insurance exchanges spread out in 50 different models. The example of the long-standing Federal Employee Health Benefit Program comes to mind. For years, federal government employees have had yearly choices of health insurance plans. More often than not, the selection decisions are based on price, and once an insurer has been selected, there is precious little movement by these employees from year to year.
So, the game has been to price the bronze, gold and platinum offerings in the exchanges as low as possible. Will the public pay $100 more per month for the same coverage to access a different (read – preferred) provider network? This, of course assumes that the public realizes that restricted provider networks are associated with the less expensive plans. Although I do imagine that some folks will purposefully select a plan in order to access a particular provider network, it won’t be a significant portion. Will there be a wholesale shift in people moving from one plan to another each year? Probably not.
Now that 8 million have signed up through the exchanges, one expects that some form of “sticker shock” is taking place as people are being informed (as they seek care) that their health insurance does not allow for care to be reimbursed at all provider settings. Will this shock stimulate a movement to a different plan next year? If it costs $100 a month more, I doubt it.
So, as more Americans move to the exchanges, watch for more pencil sharpening to take place as health plans position themselves for price-only decisions. For providers who have decided to refrain from participating in these restricted, low-cost plans, they may have to re-think their position if employers begin to send their employees to the exchanges to obtain medical coverage.
Reach Dennis J. Kain, President, at firstname.lastname@example.org or 610-558-6100.