Are Limited Choice Plans Best For Your Employees?

If you find yourself somewhat befuddled by the recent sweeping changes to health care, you are not alone. Employers across the nation are having to re-visit employee health insurance plans in an attempt to decipher the Affordable Care Act and identify the best health care options for both their business and their workers. And many are turning to limited-choice plans as a viable solution.

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If you haven’t yet acquainted yourself with this option, here are a few facts you need to know.

What is a “Limited Choice” Plan?

Often referred to as a “narrow network” plan, the Limited Choice health insurance plan is usually defined as one that is accepted by 70 percent or less of the physicians and hospitals within a patient’s area.

These plans are more affordable than those with larger networks because they tend to exclude professionals and facilities that charge higher rates for services.

Why do Limited Choice Plans Exist?

Prior to the introduction of the Affordable Care Act, insurance companies were able to keep costs down by weeding out or charging extra fees to clients with pre-existing conditions. They could also limit the services that were included, particularly expensive procedures and costly drugs. Under the new rules, with these options no longer available to them, companies now have to find other ways to keep premiums competitive.

Limited Choice plans do this by only partnering with doctors and medical facilities that will offer their services at a price that the insurance company is willing to pay. Some health care providers will enter into a deal with the insurance company because they know they will be able to make up the difference in price by treating a higher volume of patients. Many high profile facilities, however, refuse to lower their fees–meaning that they are excluded from the plan’s network.

How much can an insurance company save by dealing solely with the lower-priced entities? Quite a lot. You will likely be surprised by the huge discrepancies in health care fees that exist in this country. According to the Washington Post’s “Obamacare’s Narrow Networks are Going to Make People Furious–but They Might Control Costs,” an appendectomy can cost anywhere between $1529 and $186,955. It only makes sense that insurers would wish to stick with the more affordable options. By excluding the medical providers that charge exorbitant fees, customers can enjoy much lower premiums.

What are the Problems Associated with Limited Choice Plans?

The most obvious drawback associated with a Limited Choice plan is the fact that many doctors and facilities are not included in the covered network. This could create difficulties for someone who needs to see a particular specialist for a medical condition.

Furthermore, “What’s Up With Limited Choice Health Plans?” also points out that another issue that could arise is “the segregation of health care, where only those who can afford it will go to the best hospitals, while the rest go to a facility that might be overcrowded or offer a lower standard of care.”

While residents of metropolitan areas may find themselves able to visit a large number of facilities–even with a Limited Choice plan–rural residents will not be so fortunate. In fact, Time Magazine’s “Keeping Your Doctor under Obamacare is No Easy Feat” states that the residents in some rural areas must now drive lengthy distances to attend in-network hospitals, offering that people in central Maine must go to Portland to find a hospita, and that Texas Oncology, Texas’ largest cancer care provider, will not participate in the networks offered by any of the insurers selling policies on the Texas ACA exchange. Regional differences must be considered before opting for a plan of this type.

What are its benefits?

The driving force behind these plans is their much more affordable premiums. In the Wall Street Journal’s “Many Health Insurers to Limit Choice of Doctors, Hospitals,” the President of Blue Cross and Blue Shield of Illinois, Steve Hamman, states that his company’s products that offer smaller provider networks will cost 20 to 30 percent less than some other plans with broader networks.

And, according to research cited in The New York Times’ “A Health Trade-Off That’s Here to Stay: Lower Cost, Limited Choice,” most research suggest that there is very little connection between how much we pay for health care and the quality of the provider.

While this option may not suit everyone, it is definitely worth considering. The cost savings, alone, to both your company and your employees may make a Limited Option plan the most viable choice.

Are you insured under a Limited Choice Health Insurance Plan? What has been your experience in dealing with a limited network of health care providers?

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