A low premium means that a consumer may have to take a policy that requires high deductibles, high coinsurance (a percentage of a bill they have to pay), or high copayments (a set amount for a particular service). Shoppers in the exchanges will also have to make other trade-offs depending on the strategies insurers use to fashion a premium that sells in the marketplace.
One strategy some carriers are considering is a narrow network of providers; in other words, fewer choices of doctors and hospitals. For example, some specialty hospitals may not be included. If an insurer goes that route, it will allow in the network only providers who agree to discounts on the price of their services. Discounts could be higher—depending on who has the leverage in a given market. If doctors and hospitals have the leverage, discounts will be lower, because they have the power to keep their prices as high as possible. If insurers have the upper hand in a market, they can demand higher discounts from providers and, at least theoretically, charge lower premiums.
It’s possible carriers will take their narrow networks one step further by choosing providers who offer what they consider value. Perhaps they give better care, more coordinated care, or have higher quality or satisfaction scores on a variety of measures. The trade-off for policyholders: more choice and a higher premium versus less choice— and maybe better care and a lower premium.
Some tips for reporters
• When you hear the word “affordability,” understand who is using the term and why.
• Try to avoid passing along any spin as a he said/she said quote. But if you must, explain what it means. Context, context, context!
• Building on the model the AP used, explain the subsidies and how they work with real numbers. Better yet, use real people and show how subsidies will or won’t help them.
• Take some time to understand how insurance actuaries arrive at a premium. Understanding the different factors will help you explain to audiences how they will have to make some difficult trade-offs in the shopping exchanges. This will help avoid he said/she said presentations that are of little use to the public.
• Don’t be afraid to talk to actuaries, either on or off the record. Although it’s fashionable to discredit them because they work for insurance companies, they are the ones who best understand how policies will be priced, and can explain the nuts and bolts to you. That will help you spot the spin and avoid the trap of he said/she said.
• Keep in mind the dominant player in your market—insurers or healthcare providers. Knowing and understanding who is in control, big hospital systems, or the big insurance companies, will help you explain what’s going on for your audience.