Health Insurance Plans on the Exchanges

With the advent of the new health care insurance exchanges, there will be lots of interesting developments over the next few months.  How many plans get offered, what do they look like in terms of coverage and networks, how are they priced, how many uninsured pick up a plan?

In my state of New Hampshire, Anthem just announced some aspects of the statewide health plan they will offer on the NH exchange (run by the Feds since NH declined to develop its own).

See this story for some of the details; I apologize if the Valley News requires you to sign up first but I think you might get one free look at an article.  If not, here is the gist of it:  Anthem is offering a health plan that excludes certain hospitals across the state, with what seems to be a focus on excluding the smaller hospitals in certain area.  Alice Peck Day hospital in Lebanon is excluded in my local area while the much-larger Dartmouth Hitchcock is included.  Anthem is the only insurer offering a plan on the exchange for this year.

I have said all along that I expected exchange-based plans to embrace tight, closed networks.  I think this is a good way to both control costs and possibly improve care.

Cost control occurs in at least two ways.  One, high price suppliers can be excluded.  Second, by directing more volume to a smaller number of suppliers, those favored in-network suppliers might offer the plan better prices.  Care can improve if the limited suppliers can keep patients within one set of suppliers who agree on care protocols and avoid patients bouncing around from doctor to doctor.

Of course, these savings and improvements come at the cost of limiting patient choice (ex post choice, that is, after they have chosen the plan!)

I am curious on which of the two factors are the main reason for excluding some of the small hospitals in NH.  Are the small places really the high cost suppliers?  I might have thought that they would be able to offer lower prices.  If so, then I am left relying on the second reason, that the other hospitals want to direct the patient volume to them.

At any rate, there could be dynamic effects of this kind of policy that should be considered.  If losing access to these patients causes any of these hospitals to disappear, that will be a loss of competition.