Last year, a Kaiser survey reported that almost all individuals and families with employer-sponsored health insurance have policies that come with at least some network restrictions. These plans steer us toward certain providers and away from others.
This saves a lot of money. Insurance companies can negotiate with in-network physicians and hospitals to accept lower payments in exchange for more patients. They can include in their networks only physicians who are more efficient — who order fewer unnecessary tests, use more generic drugs and tend to keep patients healthier and out of the hospital. As a result, they can ensure that they, and their customers, get more bang for the buck.
Despite the fact that so many Americans are already in selective networks, they are nervous that the Affordable Care Act, which I helped design as an adviser to the Obama administration, will further restrict their choice of doctors or make them pay higher out-of-network charges. There was a similar backlash in the 1990s, when managed care was on the rise.
But selective networks themselves are not a problem. The problem is that not all networks are of consistently high quality.