Since health insurance exchanges will create a more transparent and competitive landscape, insurers can't use price as a featured selling point to consumers. Instead, it's their networks that will help recruit new consumers who are shopping for coverage through the online marketplaces, according to AIS Health.
Given the reform law's mandate that insurers cover pre-existing conditions and essential health benefits as well as comply with restrictive premium rate setting rules, insurers are now "boxed into a corner," says David Shea, vice president of the American Academy of Actuaries' health practice council. "When you think about all the risk-selection elements and pricing removed from the market, where are carriers going to compete? They're going to compete on their networks."
Bill Fera, principal at consultant Ernst & Young, agrees. He previously told FierceHealthPayer that "payers are going to have to be much more selective in the networks they choose" to ensure providers are "responsible in their approach to care."
That's why Blue Cross and Blue Shield of Massachusetts, for example, launched a plan for self-funded employer groups that offers a 10 percent drop in costs and a select network of cost-effective, high-quality providers. And Highmark will offer a new plan this summer that it says could save employers up to 20 percent on premiums by motivating members to use lower-cost providers, AIS Health noted.
The problem, though, is that when networks are extremely limited, the plans don't appeal to a broad range of consumers. "It's a very delicate balance," Shea said. "Employers are certainly thinking about saving money--and about employee welfare."
To overcome this challenge, insurers must properly educate consumers about narrow and tiered networks. "Whether or not plans realize the outcome that they're looking for from tiered network products will in large part hinge on how well they educate members about decisions they need to make when they choose a provider and what the consequences of those decisions are," says Jennifer Kowalski, a vice president at Avalere Health.
To learn more:
- read the AIS Health article