Consumers increasingly opt for lower premiums

Kaiser Health News reported on consumers trying to save money by switching health insurance plans that charge less for monthly premiums but also have more restrictive provider networks. Over the last three years, the number of plans that offered any out-of-network coverage dropped from 58 percent in 2015 to 29 percent in 2018. A better measure of the popularity of these plans is to look at the actual enrollment: what kinds of plans are consumers signing up for? While the article did not offer national statistics, the article did cite enrollment in California's state exchange's HMO and EPO plans (more restrictive) as having grown from 46 percent in 2016 to 70 percent in 2018, with enrollment in PPO plans (less restrictive) dropping from 54 percent to 30 percent over the same time period. Many consumers appear to be electing for lower-premium plans, even if they come with more restrictions.

If this trend continues, it might be that the providers that do not contract with the lower-premium plans will need to reconsider their pricing strategy. As long as they insist on higher rates, and insurance companies will need to charge their customers higher premiums to cover them (if these providers are unable to achieve more efficient healthcare). If these providers lack sufficient volume, they might consider lowering their prices.

An important step in helping consumers avoid needless frustration is insurance companies publishing accurate and up-to-date provider directories so that consumers can make informed decisions.