As I’ve discussed before, the Affordable Care Act is going to (perhaps ironically) cause health insurance to become less affordable for most people. One way insurance companies may try to counteract these rising costs is by narrowing the number of available doctors and hospitals that policyholders can use.
Return of the HMO
In the 1980s, Health Maintenance Organizations, or HMOs, were promoted as a way to keep rising health costs under control. The way they attempted to do this was to require policyholders to go to a primary care physician first, before they could see any specialist. Only when the primary care physician approved a visit to a specific specialist, would the care be covered under the policy.
The primary way the HMO tried to reduce expenses was by limiting coverage, and allowing policyholders to only see a small set of physicians that had contracted with the HMO. As you can imagine, most of these plans became highly unpopular as people had to jump through hoops to get their health care.
With the full implementation of the health care reform law in 2014, these narrow networks are coming back.
Why Networks Will Be Smaller
Starting in 2014, everyone who does not have a grandfathered health insurance plan that went into effect before Obama signed the act into law March 2010 will have to switch to a new government-approved plan. And, it looks like most of the PPO networks will be much smaller than those currently available to most policyholders.
As you can imagine, the reason smaller networks save insurance companies money is because the companies contract with the least expensive providers. So, as a policyholder, if you have a major or complicated health situation, you may end up not being able to see the physicians that may offer you the best chance of a successful outcome.
Another reason carriers will be offering less attractive networks is because they will want to discourage the most unhealthy applicants for applying for coverage. Starting in 2014, anyone can purchase health insurance, regardless of pre-existing conditions. An insurance company trying to avoid business is one of the perverse consequences of this misguided law.
What This Means to You
If you are one of the millions of people that will be forced to choose a new plan in 2014, in addition to your new premium, you should make sure your physician is in the network, and then look at the size of the network itself. The plans with the most narrow networks are likely to be least expensive, but balance the money saved against the increased risk you’ll face in a smaller network.
The reason I carry health insurance is to protect against the major unexpected health situations that can wipe out my savings. I’m not too worried about paying for checkups. If something major does happen, I want to be able to go to the best doctors out there.
This may not be possible even in the best networks, which is why I’m happy to have a sizable savings built up in my Health Savings Account. But, I’m still going to be looking very closely at any changes in the PPO network I have access to as I move into 2014.
For all clients of HSA for America, we’ll be sharing detailed information about network availability as that information becomes available.