Health care economics 101
First, President Barack Obama’s Affordable Care Act forced millions to switch their insurance plans. Now, critics say, those people can’t keep their doctors, either. Another broken promise? More proof the ACA is a disaster?
Not quite: As with all of those canceled policies, this “outrage” isn’t good evidence that the law is flawed, no matter what the president may have promised.
The issue is that some of the people who must switch health plans are transitioning into policies with narrow networks that don’t always include the doctors, hospitals and other providers they used before. Anecdotes have emerged of people parting with physicians they’ve trusted for years.
Yet, even for people who have never switched plans, this sort of thing happened well before the ACA; insurers constantly negotiate with providers over inclusion in coverage networks and payment rates. Doing so is one way insurers can keep costs down in the individual insurance market. In the past, other ways to control costs included skimping on benefits and turning away the sick and the old. Now, the ACA is about to stop the last two practices, a key, and popular, feature of the law. That leaves trimming provider networks as one of the last tools open to insurers to restrain premiums.
Meantime, the ACA obliges insurers to compete for business on new and more transparent markets. Insurance companies have generally responded by offering policies at a range of price points and a range of networks. If people want a wide network with lots of doctors participating, they can pay for one. If they would rather keep their premiums down, they can buy into a narrower network or sign up for a plan that demands they pay more of their health costs. For the uninsured — a huge portion of those who will be on the ACA’s new marketplaces — any of those would be a step up. After factoring in government subsidies, many transitioning off policies they had in the individual insurance markets will have a good deal, too.
The ACA won’t leave everyone better off. There will be a few people who will end up having to pay more than they used to for access to networks of comparable size. There are also some places that don’t have enough competitors in the marketplace, which means some people won’t have every option.
Still, Republicans, many of whom claim to favor market approaches to expanding health care coverage but oppose excluding patients with pre-existing conditions, can’t credibly balk at the natural results of competition organized under those very principles. No one can expect low premiums and near-unlimited service, particularly in a system designed to spread costs around so that the sick and the old can finally obtain decent health coverage from private insurers. That’s not a mistake. It’s economics.
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