Catalyst for Payment Reform

MYTHBUSTER: Consumers won’t choose insurance products that restrict choice

MYTHBUSTER: Consumers won’t choose insurance products that restrict choice

Some benefit designs are more intuitive than others.  When considering the range of complex benefit designs employers and other health care purchasers use to steer their employees to high-value care, it seems like the concept of a narrow network is an easy win. If employers want their members to see only high quality, low cost providers, they should build a network that only includes providers that meet a given performance standard and then provide financial incentives for employees to stay within it.

But we haven’t seen the uptake that we thought we would in these types of restrictive designs. According to a study by the Employee Benefit Research Institute, only seven percent of employers with health plans offered narrow network plans.

The major myth preventing this model from being successful is that consumers won’t select plans that restrict provider choice.  Hesitant employers have cited concerns about antagonizing workers as a reason for steering away from narrow network strategies. However, this may not be justified.

Studies show that consumers find it easier to navigate providers and make decisions about their health care when they have less choice.  Furthermore, studies indicate that the costs associated with narrow networks are approximately 20% less than a traditional model.  Why? Participating physicians and other providers either already offer a lower price point or lower their price due to the fact that a narrow network model is likely to send more patients their way.  This is a far better option for both employers and their employees versus other cost saving strategies that may reduce costs for employers but pass them on to employees.

Join the Debate!  Register for our upcoming Virtual Summit where Catalyst for Payment Reform will discuss the design and use of these models with experts from McKinsey & Co, UnitedHealthcare, the Group Insurance Commission of Massachusetts, Home Depot, Covered California, and more.

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