In the flurry of contradicting theories, it's important to take a step back from the trees and observe the forest – Now that some evidence has (re)surfaced on how reduced network choices can temper health care costs, proponents and opponents are scrambling to expand a finding into generalizations. Similarly, now that it's really clear that instituting a reference price for certain medical episodes will lead to greater price competition and reduce overall costs of care, policymakers and plan sponsors are rushing to figure out how to generalize a rule. These points of data are further underscored by two others, one on the increasing worry about the effects of ever rising OOP expenses on consumers and the other on the general moderation of medical cost inflation. And finally, this week, a HCFO report from a paper by Meredith Rosenthal and Anna Sinaiko, reminds us of the strong emotional link that consumers have with their providers. That link, by the way, has also proven to be very important in tempering health care costs for patients with certain conditions. So now that we've looked at the trees, let's observe the forest.
What this means to you – Imagine a health plan in which every major health care purchasing decision, and some more mundane ones, are subject to a "narrow network" – a small selected group of providers that have accepted the reference price for that medical episode. Then further imagine that for all other decisions there is an overall network that is somewhat constrained, excluding the higher priced providers. And finally consider that these narrow networks accepting reference prices will change over time as prices are adjusted. As a baseline to all of this, the individual plan member has to shop retail for all routine sick care (including care for chronic conditions) until the deductible is met. Out-of-pocket exposure is therefore present on the front end, and on the back end if costs of an episode are greater than the reference price. It's more than silly. The backlash from the American public will make the HMO backlash of the early 2000s look like flower power. So let's instead take the important findings and observe a less chaotic forest. Instead of first dollar out for recommended care – whether preventive or to manage a condition, serious illness and injury – there is very little cost sharing. Instead of narrow networks that are artificially constructed, there is pricing and quality transparency of any willing provider, along with specific spending allowances (call them reference prices) for plan members, and above that allowance the cost sharing kicks in. Patients can continue to maintain their relationship with their physicians, and the vagaries of yearly network shifts aren't needed. The point is that the findings are real, but we have to apply them in a way that will make sense, not simply to ensure affordability, but also to ensure patient buy in. That's because patient centricity shouldn't simply be something we talk or write about that applies to how care is delivered, but should equally apply to how health plan benefits are designed and administered. So when you look at the forest, look first at the faces of your loved ones, and then focus on how you want to group the trees.