More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces

By Leemore Dafny, Jonathan Gruber, Christopher Ody
The National Bureau of Economic Research, NBER Working Paper No. 20140, May 2014

Abstract

First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for exchange participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by United Healthcare’s decision not to participate in any of the FFMs. We estimate that United’s nonparticipation decision raised the second-lowest-price silver premium (which is directly linked to federal subsidies) by 5.4 percent, on average. If all insurers active in each state’s individual insurance market in 2011 had participated in all ratings areas in that state’s HIM, we estimate this key premium would be 11.1% lower and 2014 federal subsidies would be reduced by $1.7 billion.

From the Conclusion:

Given the incipiency of these markets, this study is but a first step in what will surely become a deeper and broader literature on insurance exchanges and the nature and significance of competition among exchange participants. There is substantial room for further research on how competition affects pricing and other outcomes in this market. Future studies will be easier to execute once information about consumer enrollment decisions has been released, and once the market is in longer-term equilibrium. These conditions will allow researchers to apply well- established supply-side methodologies to studying competition on the exchanges. Such research will permit more-nuanced conclusions and recommendations regarding the impact of competition and competition-related policies on various outcomes of interest. Given the large federal role in developing and regulating the exchanges, and in subsidizing the purchase of plans offered on the exchanges, research on how competition affects consumer choice and insurer behavior is of critical importance.

http://www.nber.org/papers/w20140

****

Comment:

By Don McCanne, MD

This study makes an attempt to support the theory that as the number of competing insurers increases within each of the 395 ratings areas for federally facilitated marketplaces, the premiums decrease. Though the title is quite clear that “more insurers lower premiums,” the actual data are quite fuzzy.

If you look at Figure 2 in the report, there is considerable scatter around the weighted regression line, and if you eliminate just a few of the outliers from the 395 ratings areas, there is no obvious correlation between numbers of insurers and premiums.

Nevertheless, to make their point they used two what-ifs. They project that premiums for the second lowest cost silver plan were 5.4 percent higher than they would have been simply because one insurer – United Healthcare – declined to offer plans through the exchanges. Further, they project that if all insurers already active in each rating area were to participate in the exchanges then the premium for this silver plan would have been 11.1 percent lower. It seems to be a leap to state that competition has been shown to be successful in lowering premiums because it would have been so with other competitors participating in the exchanges even though those other competitors did not actually participate. At least it demonstrates an unwavering belief in the competition theory being tested, which really wasn’t tested, but, what if?

Of greater concern is their concluding comment. They state, “There is substantial room for further research on how competition affects pricing and other outcomes in this market.” Also, “Given the large federal role in developing and regulating the exchanges, and in subsidizing the purchase of plans offered on the exchanges, research on how competition affects consumer choice and insurer behavior is of critical importance.”

Jonathan Gruber, who helped develop both the Massachusetts plan and the Affordable Care Act, is a co-author of this NBER paper. He had told us that the proven model of single payer had to be rejected because of lack of political feasibility, yet in its place we had to adopt a model using health plan competition – a model that needs further research to see how it will affect consumer choice and insurer behavior. What? We enact this for the entire nation, and then we’ll see how it works?

Actually we do not need further research on private insurance plans competing within an exchange. We have had decades of experience with the Federal Employees Health Benefits Program, and with California’s CalPERS for public employees and the Pacific Business Group on Health for employer-sponsored plans. Each of these exchanges offered a choice of competing private plans. Yet health care costs continued to escalate at intolerable rates. Plans competing within exchanges have not been effective in slowing health care inflation to levels found in other nations.

The authors contend that more research on health plan competition is of “critical importance.” Baloney. We’ve had all the research we need on health plan competition. What we need is to get rid of the private health plans, fix Medicare, and then provide it to everyone. Now.

More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces

By Leemore Dafny, Jonathan Gruber, Christopher Ody
The National Bureau of Economic Research, NBER Working Paper No. 20140, May 2014

Abstract

First-year insurer participation in the Health Insurance Marketplaces (HIMs) established by the Affordable Care Act is limited in many areas of the country. There are 3.9 participants, on (population-weighted) average, in the 395 ratings areas spanning the 34 states with federally facilitated marketplaces (FFMs). Using data on the plans offered in the FFMs, together with predicted market shares for exchange participants (estimated using 2011 insurer-state market shares in the individual insurance market), we study the impact of competition on premiums. We exploit variation in ratings-area-level competition induced by United Healthcare’s decision not to participate in any of the FFMs. We estimate that United’s nonparticipation decision raised the second-lowest-price silver premium (which is directly linked to federal subsidies) by 5.4 percent, on average. If all insurers active in each state’s individual insurance market in 2011 had participated in all ratings areas in that state’s HIM, we estimate this key premium would be 11.1% lower and 2014 federal subsidies would be reduced by $1.7 billion.

From the Conclusion:

Given the incipiency of these markets, this study is but a first step in what will surely become a deeper and broader literature on insurance exchanges and the nature and significance of competition among exchange participants. There is substantial room for further research on how competition affects pricing and other outcomes in this market. Future studies will be easier to execute once information about consumer enrollment decisions has been released, and once the market is in longer-term equilibrium. These conditions will allow researchers to apply well- established supply-side methodologies to studying competition on the exchanges. Such research will permit more-nuanced conclusions and recommendations regarding the impact of competition and competition-related policies on various outcomes of interest. Given the large federal role in developing and regulating the exchanges, and in subsidizing the purchase of plans offered on the exchanges, research on how competition affects consumer choice and insurer behavior is of critical importance.

http://www.nber.org/papers/w20140

This study makes an attempt to support the theory that as the number of competing insurers increases within each of the 395 ratings areas for federally facilitated marketplaces, the premiums decrease. Though the title is quite clear that “more insurers lower premiums,” the actual data are quite fuzzy.

If you look at Figure 2 in the report, there is considerable scatter around the weighted regression line, and if you eliminate just a few of the outliers from the 395 ratings areas, there is no obvious correlation between numbers of insurers and premiums.

Nevertheless, to make their point they used two what-ifs. They project that premiums for the second lowest cost silver plan were 5.4 percent higher than they would have been simply because one insurer – United Healthcare – declined to offer plans through the exchanges. Further, they project that if all insurers already active in each rating area were to participate in the exchanges then the premium for this silver plan would have been 11.1 percent lower. It seems to be a leap to state that competition has been shown to be successful in lowering premiums because it would have been so with other competitors participating in the exchanges even though those other competitors did not actually participate. At least it demonstrates an unwavering belief in the competition theory being tested, which really wasn’t tested, but, what if?

Of greater concern is their concluding comment. They state, “There is substantial room for further research on how competition affects pricing and other outcomes in this market.” Also, “Given the large federal role in developing and regulating the exchanges, and in subsidizing the purchase of plans offered on the exchanges, research on how competition affects consumer choice and insurer behavior is of critical importance.”

Jonathan Gruber, who helped develop both the Massachusetts plan and the Affordable Care Act, is a co-author of this NBER paper. He had told us that the proven model of single payer had to be rejected because of lack of political feasibility, yet in its place we had to adopt a model using health plan competition – a model that needs further research to see how it will affect consumer choice and insurer behavior. What? We enact this for the entire nation, and then we’ll see how it works?

Actually we do not need further research on private insurance plans competing within an exchange. We have had decades of experience with the Federal Employees Health Benefits Program, and with California’s CalPERS for public employees and the Pacific Business Group on Health for employer-sponsored plans. Each of these exchanges offered a choice of competing private plans. Yet health care costs continued to escalate at intolerable rates. Plans competing within exchanges have not been effective in slowing health care inflation to levels found in other nations.

The authors contend that more research on health plan competition is of “critical importance.” Baloney. We’ve had all the research we need on health plan competition. What we need is to get rid of the private health plans, fix Medicare, and then provide it to everyone. Now.

Paradigm Lost: Provider Concentration And The Failure Of Market Theory

By Bruce C. Vladeck
Health Affairs, May 19, 2014 (online)

The belated rediscovery of provider prices as a significant contributor to the high costs of US health care (although the data were there in the literature all along), coupled with the presumed role of provider concentration in producing some of the upward pressure on prices, has created a serious conundrum for those who seek to apply conventional economic reasoning to matters of health policy. The conundrum arises from the conflict between the presumed per se undesirability of increased concentration and the fact that many of the causes of that increase may themselves be highly desirable — or at least practically unavoidable.

The dilemma posed for policy makers and analysts arises from the assumption that increased concentration is intrinsically a bad thing, even though many good things seem to be happening as provider concentration progresses. On the one hand, the number of independent health care providers appears to be decreasing as a result of hospital mergers and acquisitions, the agglomeration of physicians into larger and larger group practices, and the alignment of physician practices with hospitals. The relationship between increased provider concentration and increased prices has long been conventional wisdom (even if recent data and analyses have called that wisdom at least partially into question). Ergo, such increases in concentration should be opposed.

On the other hand, at least some of the factors driving increased concentration are widely believed to improve care and population health, or at least to encourage greater efficiency in the delivery of health care services. These factors include growing clinical integration across previously atomized providers; the dramatic reduction in use of inpatient services, which decreases the number of full-service hospitals needed in any given market; the mandatory adoption of expensive information technologies; and the growing experimentation with payment schemes in which providers bear at least some degree of financial risk.

Sage: ‘Getting The Product Right’

Sage is trying to address the very real and very significant costs of the inefficiency that permeates the US health care system. Recognizing that the power to influence prices that comes with increased market power theoretically reduces the incentives for efficiency, Sage proposes to reduce that power by redefining what health care payers buy. This, in turn, would presumably give consumers greater ability to make informed, price-sensitive decisions about which health services they wished to consume.

Antitrust analysis is generally complicated in markets with differentiated products. Sage’s proposal would either exacerbate that problem or require the creation of a new authoritative regulatory structure to determine exactly how new products should be defined.

Ginsburg And Pawlson: Let Consumers Decide What To Buy

The authors’ theory seems to be that if increased provider consolidation limits the ability of insurers to exert downward pressure on prices, then the solution to high prices is transferring an increasing share of the purchasing function to individual consumers through higher out-of-pocket liabilities and the development of tiered networks, which offer different prices to consumers with ostensibly different preferences. However, this prescription only exacerbates the underlying problem. No matter how much information — the magical potion in many market-based approaches to health policy — atomized consumers may have, it is almost certainly less than that of even the most indolent insurance company.

Ginsburg and Pawlson also appear to be in favor of narrowing provider networks as a way of reducing providers’ leverage in negotiations with payers and thereby holding prices down. They note that in the 1990s such policies engendered significant consumer resistance because of the restrictions they imposed on access to providers. However, they seem not to mind the fact that such resistance may be minimized in the future by the growing inability of many households to afford the kind of health care they prefer. Such an approach not only fails to counteract the growing economic inequality in this country but also appears to legitimate it.

The Myth Of The Sovereign Consumer

One effect of changes in health financing in the past two decades is unavoidably clear, if too often overlooked or minimized in importance by the health policy community: The average individual with health insurance is considerably worse off now than twenty years ago. Out-of-pocket payments are much higher, for both premiums and copayments; cash on the barrelhead is increasingly required for services that used to be provided first and billed for afterward; and the numbers of avaricious debt collectors and medically related bankruptcies continue to soar.

At the same time, consumers are regularly inundated with self-serving or downright erroneous information from health insurers, providers, and entrepreneurs alike about health care services and their use that carries the implicit message that any illness or financial difficulty is essentially the fault of the consumer.

It is ironic that the increased unaffordability of routine health care is exactly the problem that historically led to the creation of health insurance programs in both the public and private sectors. Those who are quick to applaud the expected demise of employer-sponsored coverage in the United States overlook the extent to which large employers, eager at least to not offend their employees, historically used their purchasing power with insurers to protect those employees (as well as to maintain an enormous de facto cross-subsidization of the less healthy employees and family members by the healthier ones).

Of course, government insurance programs wield this purchasing power more directly, more openly, and—when it comes to the effect on provider prices and the minimization of out-of-pocket liabilities for individual households—far more effectively. In other words, Medicare and Medicaid, and their beneficiaries, are much less at risk of increased prices resulting from provider concentration than are most private insurers or privately insured people.

Those who are uneasy about further increasing the government’s role in minimizing price growth in health care might do well to compare today’s high-deductible plans to the historical experience of Blue Cross plans with private-sector monopoly control (which hardly ever paid hospitals more than their actual costs) and first-dollar coverage.

As a proud former rate setter in both state and federal governments, I confess to an absence of alarm at these authors’ recognition that if none of their nostrums work, rate regulation may become increasingly unavoidable. But I am skeptical of the political likelihood of a return to rate setting; nor am I entirely convinced of its desirability. The exercise of government power is one way to constrain sellers in concentrated markets, but not the only one.

It is conceivable, for instance, that one explanation of the relatively low rate of hospital price increases in recent years is that private insurers, in response to some of the first- and second-order pressures generated by the Affordable Care Act, are actually negotiating aggressively with hospitals, instead of just passing on increases to their customers or enrollees, as was standard practice in the past.

Instead of continuing to try to impose axiomatic and solipsistic theories on a reality to which they increasingly fail to apply, we need to figure out what kind of health care system we really want and how much we are prepared to pay for it. Then we need to invent or reconfigure the social institutions that we will have to have to get that system.

http://content.healthaffairs.org/content/early/2014/05/13/hlthaff.2014.0336

Comment:

By Don McCanne, MD

In health care, there is plenty of evidence that cooperation benefits patients much more than does competition. Working together to provide the best care for the patient is far better than competing to obtain the best business outcome for the health care providers. The current increasing consolidation in the health care delivery system shines light on these conflicting dynamics.

In this paper, Bruce Vladeck provides a perspective in response to different views of this topic released in online papers and presented at a Health Affairs briefing this morning, sponsored by The Commonwealth Fund. Although the discussion was primarily about the impact of provider concentration in the health care marketplace, the issues go well beyond that.

As Vladeck mentions, historically the Blue Cross plans exerted private sector monopoly control while providing first dollar coverage. Now the coverage has deteriorated, impairing access to care and leaving patients exposed to major costs. The dynamic that we need to be looking at is not the balance between the market clout of the consolidating health care providers and the purchasing power of insurers as representatives of the payers, rather the important dynamic, again according to Vladeck, should be configuration of the social institutions that will allow us to pay for the health care system that we really want.

Although Vladeck suggests that insurers may have become more aggressive price negotiators, he nevertheless makes it clear that the government price setters – Medicare and Medicaid – have had much more clout.

Consolidation that improves efficiency, effectiveness and access for the benefit of the patient is great. Other nations have shown that you do not need to limit consolidation or concentration to prevent overpricing in such imbalanced markets. All you need is government price administration such as we would have with a single payer financing system. That would eliminate the superfluous private insurers with their wasteful administrative excesses and inefficiencies that stem from our dysfunctional fragmentation of health care financing.

Paradigm Lost: Provider Concentration And The Failure Of Market Theory

By Bruce C. Vladeck
Health Affairs, May 19, 2014 (online)

The belated rediscovery of provider prices as a significant contributor to the high costs of US health care (although the data were there in the literature all along), coupled with the presumed role of provider concentration in producing some of the upward pressure on prices, has created a serious conundrum for those who seek to apply conventional economic reasoning to matters of health policy. The conundrum arises from the conflict between the presumed per se undesirability of increased concentration and the fact that many of the causes of that increase may themselves be highly desirable — or at least practically unavoidable.

The dilemma posed for policy makers and analysts arises from the assumption that increased concentration is intrinsically a bad thing, even though many good things seem to be happening as provider concentration progresses. On the one hand, the number of independent health care providers appears to be decreasing as a result of hospital mergers and acquisitions, the agglomeration of physicians into larger and larger group practices, and the alignment of physician practices with hospitals. The relationship between increased provider concentration and increased prices has long been conventional wisdom (even if recent data and analyses have called that wisdom at least partially into question). Ergo, such increases in concentration should be opposed.

On the other hand, at least some of the factors driving increased concentration are widely believed to improve care and population health, or at least to encourage greater efficiency in the delivery of health care services. These factors include growing clinical integration across previously atomized providers; the dramatic reduction in use of inpatient services, which decreases the number of full-service hospitals needed in any given market; the mandatory adoption of expensive information technologies; and the growing experimentation with payment schemes in which providers bear at least some degree of financial risk.

Sage: ‘Getting The Product Right’

Sage is trying to address the very real and very significant costs of the inefficiency that permeates the US health care system. Recognizing that the power to influence prices that comes with increased market power theoretically reduces the incentives for efficiency, Sage proposes to reduce that power by redefining what health care payers buy. This, in turn, would presumably give consumers greater ability to make informed, price-sensitive decisions about which health services they wished to consume.

Antitrust analysis is generally complicated in markets with differentiated products. Sage’s proposal would either exacerbate that problem or require the creation of a new authoritative regulatory structure to determine exactly how new products should be defined.

Ginsburg And Pawlson: Let Consumers Decide What To Buy

The authors’ theory seems to be that if increased provider consolidation limits the ability of insurers to exert downward pressure on prices, then the solution to high prices is transferring an increasing share of the purchasing function to individual consumers through higher out-of-pocket liabilities and the development of tiered networks, which offer different prices to consumers with ostensibly different preferences. However, this prescription only exacerbates the underlying problem. No matter how much information — the magical potion in many market-based approaches to health policy — atomized consumers may have, it is almost certainly less than that of even the most indolent insurance company.

Ginsburg and Pawlson also appear to be in favor of narrowing provider networks as a way of reducing providers’ leverage in negotiations with payers and thereby holding prices down. They note that in the 1990s such policies engendered significant consumer resistance because of the restrictions they imposed on access to providers. However, they seem not to mind the fact that such resistance may be minimized in the future by the growing inability of many households to afford the kind of health care they prefer. Such an approach not only fails to counteract the growing economic inequality in this country but also appears to legitimate it.

The Myth Of The Sovereign Consumer

One effect of changes in health financing in the past two decades is unavoidably clear, if too often overlooked or minimized in importance by the health policy community: The average individual with health insurance is considerably worse off now than twenty years ago. Out-of-pocket payments are much higher, for both premiums and copayments; cash on the barrelhead is increasingly required for services that used to be provided first and billed for afterward; and the numbers of avaricious debt collectors and medically related bankruptcies continue to soar.

At the same time, consumers are regularly inundated with self-serving or downright erroneous information from health insurers, providers, and entrepreneurs alike about health care services and their use that carries the implicit message that any illness or financial difficulty is essentially the fault of the consumer.

It is ironic that the increased unaffordability of routine health care is exactly the problem that historically led to the creation of health insurance programs in both the public and private sectors. Those who are quick to applaud the expected demise of employer-sponsored coverage in the United States overlook the extent to which large employers, eager at least to not offend their employees, historically used their purchasing power with insurers to protect those employees (as well as to maintain an enormous de facto cross-subsidization of the less healthy employees and family members by the healthier ones).

Of course, government insurance programs wield this purchasing power more directly, more openly, and—when it comes to the effect on provider prices and the minimization of out-of-pocket liabilities for individual households—far more effectively. In other words, Medicare and Medicaid, and their beneficiaries, are much less at risk of increased prices resulting from provider concentration than are most private insurers or privately insured people.

Those who are uneasy about further increasing the government’s role in minimizing price growth in health care might do well to compare today’s high-deductible plans to the historical experience of Blue Cross plans with private-sector monopoly control (which hardly ever paid hospitals more than their actual costs) and first-dollar coverage.

As a proud former rate setter in both state and federal governments, I confess to an absence of alarm at these authors’ recognition that if none of their nostrums work, rate regulation may become increasingly unavoidable. But I am skeptical of the political likelihood of a return to rate setting; nor am I entirely convinced of its desirability. The exercise of government power is one way to constrain sellers in concentrated markets, but not the only one.

It is conceivable, for instance, that one explanation of the relatively low rate of hospital price increases in recent years is that private insurers, in response to some of the first- and second-order pressures generated by the Affordable Care Act, are actually negotiating aggressively with hospitals, instead of just passing on increases to their customers or enrollees, as was standard practice in the past.

Instead of continuing to try to impose axiomatic and solipsistic theories on a reality to which they increasingly fail to apply, we need to figure out what kind of health care system we really want and how much we are prepared to pay for it. Then we need to invent or reconfigure the social institutions that we will have to have to get that system.

http://content.healthaffairs.org/content/early/2014/05/13/hlthaff.2014.0336

In health care, there is plenty of evidence that cooperation benefits patients much more than does competition. Working together to provide the best care for the patient is far better than competing to obtain the best business outcome for the health care providers. The current increasing consolidation in the health care delivery system shines light on these conflicting dynamics.

In this paper, Bruce Vladeck provides a perspective in response to different views of this topic released in online papers and presented at a Health Affairs briefing this morning, sponsored by The Commonwealth Fund. Although the discussion was primarily about the impact of provider concentration in the health care marketplace, the issues go well beyond that.

As Vladeck mentions, historically the Blue Cross plans exerted private sector monopoly control while providing first dollar coverage. Now the coverage has deteriorated, impairing access to care and leaving patients exposed to major costs. The dynamic that we need to be looking at is not the balance between the market clout of the consolidating health care providers and the purchasing power of insurers as representatives of the payers, rather the important dynamic, again according to Vladeck, should be configuration of the social institutions that will allow us to pay for the health care system that we really want.

Although Vladeck suggests that insurers may have become more aggressive price negotiators, he nevertheless makes it clear that the government price setters – Medicare and Medicaid – have had much more clout.

Consolidation that improves efficiency, effectiveness and access for the benefit of the patient is great. Other nations have shown that you do not need to limit consolidation or concentration to prevent overpricing in such imbalanced markets. All you need is government price administration such as we would have with a single payer financing system. That would eliminate the superfluous private insurers with their wasteful administrative excesses and inefficiencies that stem from our dysfunctional fragmentation of health care financing.

California consumers say duped by Blue Shield’s limited Obamacare plans

By Terry Baynes
Reuters, May 15, 2014

Consumers who purchased new health plans from Blue Shield of California have sued the insurer, claiming they were misled into thinking the insurance would cover their desired doctors and hospitals.

In their complaint filed in California state court on Wednesday, San Francisco residents John Harrington and Alex Talon accused Blue Shield of misrepresenting that their plans, sold on California’s health exchange, would cover the full provider network advertised on the company’s website.

They sued on behalf of a class of people who had purchased so-called “preferred provider organization” plans from the insurer only to realize that the doctor and hospital networks for their plans were limited.

Harrington bought a so-called silver plan on California’s online exchange while Talon bought a platinum plan through the insurer’s website. They said they made their choices based on Blue Shield’s alleged representations that their doctors would be covered.

After receiving medical treatment numerous times between January and March, Harrington and Talon later discovered that their providers were not covered, forcing them to pay the charges out-of-pocket, the complaint said.

http://www.reuters.com/article/2014/05/15/us-usa-healthcare-blueshield-idUSBREA4E0VN20140515

****

Recording seems to refute claims made by Anthem

By David Lazarus
Los Angeles Times, May 15, 2014

David Cienfuegos said his wife was told by Anthem Blue Cross that his doctor was part of the insurer’s coverage network, but then was left with the tab for about $5,800 in medical costs after Anthem insisted that it never said any such thing.

In this case, though, Cienfuegos, 40, has a digital recording of the Anthem rep clearly saying his surgery would be covered.

And he’s suing to hold the insurer accountable.

In its Feb. 19 letter rejecting Cienfuegos’ appeal, Anthem said the company’s own records show that “no specific provider was mentioned in the conversation nor was it noted you were misinformed about participating status for this specific provider in question.”

That’s just b-i-z-a-r-r-e.

Cienfuegos’ wife can be heard on the recording spelling out the provider’s name, and the Anthem rep can be heard confirming both his in-network status and that the procedure would be covered.

http://www.latimes.com/business/la-fi-lazarus-20140516-column.html

****

Comment:

By Don McCanne, MD

One of the more important reasons given for using private health plans as a basis of reform was that they were working well and people were happy with them. The Blues – Blue Cross and Blue Shield – were held out as prime examples of well functioning plans. Although patients did not like being restricted to provider networks, the lists were quite comprehensive, so it worked. But now…

Both the Blue Shield and the Blue Cross plans in California are using more restricted networks in Covered California – the insurance exchange under the Affordable Care Act. Even the plans with the highest coverage – the platinum plans – are using these narrower networks.

It is a problem enough for the patients who are having difficulty finding out which physicians and hospitals are on the plan, but these anecdotal accounts confirm that the insurers are not a reliable source of that information either. And when the insurers are wrong, they still have the chutzpah to try to make their own clients absorb the losses.

Not only do individuals frequently change their coverage, the provider lists also frequently change. Since the lists are now narrower, there is a much greater probability that patients will lose continuity of care because of the unstable coverage and unstable networks.

There will be many more lawsuits like these, which may then cause the insurers to relax their restrictions. Yet far too many will still be caught in this out-of-network trap. And the insurers will not stop there. They will introduce yet more market innovations that will be designed to reduce their obligation to pay for health care. After all, they are businesses, not public service organizations.

Enough. Time for a single payer national health program.