Lower Health Insurance Premiums to Come at Cost of Fewer Choices

By Robert Pear
The New York Times, September 22, 2013

Federal officials often say that health insurance will cost consumers less than expected under President Obama’s health care law. But they rarely mention one big reason: many insurers are significantly limiting the choices of doctors and hospitals available to consumers.

From California to Illinois to New Hampshire, and in many states in between, insurers are driving down premiums by restricting the number of providers who will treat patients in their new health plans.

Some consumer advocates and health care providers are increasingly concerned. Decades of experience with Medicaid, the program for low-income people, show that having an insurance card does not guarantee access to specialists or other providers.

Consumers should be prepared for “much tighter, narrower networks” of doctors and hospitals, said Adam M. Linker, a health policy analyst at the North Carolina Justice Center, a statewide advocacy group.

Insurers say that with a smaller array of doctors and hospitals, they can offer lower-cost policies and have more control over the quality of health care providers. They also say that having insurance with a limited network of providers is better than having no coverage at all.

In a new study, the Health Research Institute of PricewaterhouseCoopers, the consulting company, says that “insurers passed over major medical centers” when selecting providers in California, Illinois, Indiana, Kentucky and Tennessee, among other states.

“Doing so enables health plans to offer lower premiums,” the study said. “But the use of narrow networks may also lead to higher out-of-pocket expenses, especially if a patient has a complex medical problem that’s being treated at a hospital that has been excluded from their health plan.”

In California, the statewide Blue Shield plan has developed a network specifically for consumers shopping in the insurance exchange. Juan Carlos Davila, an executive vice president of Blue Shield of California… said the new network did not include the five medical centers of the University of California or the Cedars-Sinai Medical Center near Beverly Hills.

Daniel R. Hawkins Jr., a senior vice president of the National Association of Community Health Centers, which represents 9,000 clinics around the country, said: “We serve the very population that will gain coverage — low-income, working class uninsured people. But insurers have shown little interest in including us in their provider networks.”

Dr. Bruce Siegel, the president of America’s Essential Hospitals, formerly known as the National Association of Public Hospitals and Health Systems, said insurers were telling his members: “We don’t want you in our network. We are worried about having your patients, who are sick and have complicated conditions.”

“If a health plan has a narrow network that excludes many doctors, that may shoo away patients with expensive pre-existing conditions who have established relationships with doctors,” said Mark E. Rust, the chairman of the national health care practice at Barnes & Thornburg, a law firm. “Some insurers do not want those patients who, for medical reasons, require a broad network of providers.”

NYT reader response:

Don McCanne
San Juan Capistrano, CA

By designing reform that leaves the private insurers in charge, it was inevitable that their business model would be directed to selling their own insurance product by trying to keep their premiums competitive. Instead of controlling health care costs, they are shifting the costs to people who actually need health care – defeating the purpose of insurance.

Private insurers will continue to search for innovative ways to keep their premiums competitive, such as narrow networks, high deductibles, and selling in only healthy, profitable markets. Their waste of our health care dollars can be demonstrated by last week’s report from the Office of the Actuary of CMS that projects that, in 2022, government administrative costs for health care (Medicare, Medicaid, CHIP, VA, IHS, Department of Defense, etc.) will be $70 billion, whereas the administrative costs of the private insurers will be $313 billion! (That doesn’t even include the cost of the tremendous administrative burden placed on the health care delivery system.) What a waste!

We need to throw out the outrageously priced and administratively burdensome private insurance industry that merely screws up our health care and replace it with an improved version of Medicare that covers everyone.


This article featured prominently in The New York Times explains the adverse consequences of the private insurers’ decisions to restrict access to narrow networks of physicians and hospitals. When you look at the very large number of responses to this article, it is somewhat reassuring that the responses endorsed by the readers acknowledge that we need to replace the private insurers with a single payer system.

Use the link above to read the full article, and then clink on “Reader Picks.” We need to translate this into citizen action.