Insurers, flexibility, and savings
The most interesting social experiments start with one basic question: What does it take to make people change the way they do something important?
Health insurance companies doing business in Massachusetts are wrestling with that question right now. They are rolling out all kinds of new medical insurance products, trying to figure out what kinds of limits and restrictions people are willing to accept in order to save money on their premiums.
For the past decade, the blunt tool insurers used to limit premium increases was a system of high - often very high - deductibles and copays. That strategy is approaching its limits.
The newer alternative policies come in different shades but most fall into one of two general categories: tiered-network insurance or limited-network coverage.
Tiered policies let patients go anywhere for care but require them to pay more for treatment by expensive providers. Limited network policies do just what their name suggests: put many of the priciest health care facilities off limits to save money.
There's another way to think of those new plans. Tiered networks provide some savings and flexibility. Limited networks tend to offer bigger premium savings that get your attention - often 20 percent or more - in return for tougher restrictions.
So what do health care consumers actually want? Enrollment numbers in the coming months will provide fresh clues. Harvard Pilgrim will begin offering a new limited network plan next week. Some members of a health insurance cooperative organized by the Massachusetts Retailers Association are eligible to switch into a new limited-network plan for the first time on Sunday.
But it's clear which kind of alternative insurance policy already covers more companies and their employees in Massachusetts. Those numbers heavily favor tiered-network plans over limited-network options.
Blue Cross Blue Shield of Massachusetts began offering a tiered-network policy two years ago and immediately hailed the coverage as its fastest-starting insurance product ever. Another 100,000 people were enrolled in 2012, and Blue Cross says its tiered-network plan now covers about 200,000 people. Blue Cross says it's looking at limited-network options and will probably offer a plan along those lines in the future - but doesn't right now.
Tufts Health Plan counts 230,000 people in tiered-network plans, including its own employees, compared with just 9,500 enrolled in the insurer's limited-network option. Overall, Tufts insures 935,838 members.
Harvard Pilgrim reports about 70,000 people covered by its tiered-network option, compared with about 20,000 in a limited plan. Harvard Pilgrim covers about a million people in Massachusetts.
Fallon Community Health Plan in Worcester, the smallest insurer in the group, has the longest track record and best success with limited-network plans. It has 36,000 people enrolled in a limited network, compared with 94,000 in a broad HMO plan that makes nearly all health care providers available.
Add up all those numbers and tiered networks are landslide winners. One caveat: Limited-network policies are newer, and most insurance plans need time to build business.
But there are reasons why insurance companies think limited-network plans have a real future. The trick is finding the right balance between limits and savings.
"If the premium difference is significantly great then I think they can become attractive,'' says Tufts Health Plan chief Jim Roosevelt. "If you're only talking about 10 or 15 percent, then I think there are a limited number of people willing to make that choice up front.''
Roosevelt is taking a dig at the brand new Harvard Pilgrim limited-network plan that offers access to an exceptionally broad roster of health care providers - but still not the most expensive hospitals - in return for more modest savings of about 10 percent. Of course, Harvard Pilgrim executives don't see it that way.
I suspect tiered-network health plans will remain much more popular than limited networks this year and beyond. Saving some money and retaining some choice feels like the kind of compromise most people would choose.
The good news for all consumers is that health insurance companies are creating and marketing lots of new products that give people real choices - beyond unaffordable premiums and brutal copays and deductibles. That's a step in the right direction.