How are health insurers going to keep employer insurance premiums increases lower? One way that we are already seeing is by limiting network access. Health insurers negotiate terms directly with providers such as hospital systems, physicians and other health providers. Each contract has different levels of discounts and terms.
The costliest plan can only be as inexpensive as the most expensive provider contracted with. For example, in the Sacramento area, with 4 major health systems (one staff model HMO plan and 3 fee-for-service), insurance plans with all 3 fee-for-service networks included are the most costly for a given level of copay, deductible and maximum out of pocket (MOOP).
As network access is reduced to 2 or even 1 provider network that is accessible, premium costs start to decrease. One local HMO offers two networks and is very price competitive. The staff model HMO (self-contained provider and insurer) and is also very cost effective.
Carriers that had been offering all 3 of the major networks are now realizing that to be cost competitive they must reduce premiums and one approach is to reduce the number of networks offered. Premiums are not quite yet approaching the limited access HMO plans, but hopefully will.
The implication for employers is that they must decide between network access for their employees vs premium. Many employers don't want to inconvenience their employees forcing them to change doctors or other providers, but as employers continue to feel premium price pressure, they will have to make these difficult choices.
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