Choice and Costs

The New York Times reports on complaints by consumers about limitations on their access to physicians and hospitals. According to the story, insurers have restricted their provider networks to contain costs, while misleading their customers about the extent of the restrictions.

Without more information, one cannot draw firm conclusions about the problems. We cannot tell the extent to which insurers are acting badly, nor can we tell how much we are seeing the same backlash as in the 1990's when managed care organizations tried to contain costs by limiting their provider networks.

But the reports are not surprising. Limiting patient choice can be an important way to reduce costs. However, it is a politically unpopular way to do so. Hence, we often are told by candidates and elected officials that their health care reform will promote the three C's--greater coverage, lower costs, and broad choice. 

It will be important to see how much the public tolerates restrictions on choice. It may make a big difference on whether the health insurance exchange premiums remain favorable.