Boston Capital
By Steven Syre
Globe Columnist / June 21, 2011
How many people would really choose a health insurance plan that lowers premiums but restricts the availability of popular but higher-priced hospitals and other medical providers? Would you make that deal?
This is an important question in a state crowded with famous hospitals and saddled with among the most expensive health care costs in the nation. A bad economy makes the choice harder.
Recently, health insurers reported solid demand for plans that hold down premiums but charge big fees to customers when they use more expensive health care providers. Blue Cross Blue Shield of Massachusetts rolled out such a plan at the start of the year, and it quickly became the insurer’s fastest new-product launch ever.
Would that also happen among an even larger sampling of consumers? Would many really select a plan that said no to someone who wanted to go to Massachusetts General Hospital or Children’s Hospital?
The Group Insurance Commission, which administers insurance plans covering all state employees and some municipal workers across Massachusetts, pitched so-called limited-network options hard when it required everyone to reenroll in some plan last month.
The result: Thirty percent of state employees opted for one of a half dozen limited-network plans. The GIC counts 190,000 subscribers, including municipal employees who were not involved in the reenrollment, and covers 350,000 people.
That’s a big number with real implications for all health care providers, especially those Massachusetts hospitals that have been able to charge more for nearly everything, thanks to the market power that comes with a stellar medical reputation or complete geographic domination.
People increasingly exposed to the actual cost of their health care are making insurance decisions influenced by something other than medical services. They’re thinking about money, and insurers are giving them new options.
The GIC offered limited network plans because the state is facing a big problem with health insurance costs — just like every other employer.
“The way most purchasers are doing it is to simply shift the cost to employees,’’ says GIC executive director Dolores Mitchell. “We did a little of that last year but there’s a limit to what I can do and live with myself without trying something else. This is the ‘something else’ we decided to try. It maintains choice. If we shift costs, we take the choice out of [customers’] hands.’’
The GIC enrollment results are big — but come with caveats. Chief among them, the commission bribed state employees to enroll in them for at least a year. It offered a three-month premium holiday to people who committed to one of those plans for at least a year.
Though the 30 percent figure is high, the GIC already counted 14 percent of the people it insures in some kind of limited network plan, so it wasn’t starting from scratch. The commission more than doubled the number of people in those plans — adding another 10,000 state employees to the count.
Employees who moved to one of the limited plans will save an average of $600 a year on individual plans and $1,400 on family plans, according to the state.
The GIC’s menu of limited network plans offered a lot of options. Three plans that attracted most of the enrollment were significantly different from each other. One permitted employees to go to a hospital outside their limited network — for a price that can run into the thousands. Some limited access only to hospitals — not doctors — but others were more restrictive.
Many hospitals were available to people on some of the limited network plans but not others. Mass General and Brigham and Women’s Hospital were among the few hospitals not included in the GIC’s three most popular limited network plans.
The GIC’s reenrollment results answer some questions but pose new ones. For starters, it’s unclear how many people will stay with limited network plans once they get a taste of the restrictions. Another question: Will limited networks drive an economic wedge between younger, healthier people and older employees who need more care?
For now this much is clear: People are willing to make new choices about health care that may change a familiar medical landscape.
Steven Syre is a Globe columnist. He can be reached at syre@globe.com.
© Copyright 2011 Globe Newspaper Company.
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