When the federal government imposes regulations aimed at addressing an issue within the health care system, it inevitably causes problems elsewhere, not unlike squeezing one end of a water balloon and making it expand on the other.
This has been demonstrated time and again over the last several months as problems arising from the implementation of Obamacare have popped up throughout the medical sector. One acute problem is the tradeoff between costs and access.
Obamacare imposes numerous regulations on insurance policies, requiring that each of them provide a comprehensive set of benefits deemed essential by Washington bureaucrats while at the same time capping deductibles and out-of-pocket costs. These reforms make insurance more expensive, especially for younger and healthier Americans with lower routine medical costs.
Responding to these changes, insurance companies decided to cut costs by driving a harder bargain when negotiating payment rates with doctors, hospitals and other medical providers. Though premiums still are rising for individuals seeking to purchase health insurance, those increases were somewhat contained by insurers’ countermoves of paring down their provider networks.
The problem is that once Obamacare went into effect, Americans throughout the country began to realize that having a new insurance plan that promised lots of new benefits didn't necessarily mean much if those benefits were too hard to access. Last August, Modern Healthcare reported on a McKinsey & Co. analysis of 955 Obamacare plan offerings in 13 states, which found that almost half were of “the narrow-network type,” meaning enrollees' choices were restricted and that they would “have limited or no coverage if they seek care outside their plan network.” In California, none of the plans offered through the state's exchange covered care at prestigious hospitals such as the UCLA Medical Center and Cedars-Sinai.
In response, the Centers for Medicare and Medicaid Services on Friday issued final guidance to health insurers on the 2015 benefit year, imposing tougher regulations to ensure “network adequacy.” Next year, a plan won't be allowed on an Obamacare insurance exchange unless the insurer can offer what CMS considers “reasonable access” to doctors and hospitals. At least 30 percent of “essential community providers” (who serve predominantly low-income individuals) have to be in all of an insurer's networks, too.
Insurers will be able to meet these regulations — but at a price. Expanding provider networks without easing regulations elsewhere will drive up costs. So here’s the rub for Obama administration regulators: If they force insurers to offer truly broad networks on top of all the other benefit requirements, premiums will skyrocket. But if they put more pressure on insurers to contain the growth of premiums, access will suffer.
There's an alternative solution: Remove regulations dictating what type of policies insurers must offer and telling Americans what type of insurance they must buy. This would let people decide for themselves whether they want more expensive insurance with more comprehensive benefits and broader access to providers, or cheaper insurance with fewer benefits and more limited access. Allowing consumers to decide how they want to spend their own money should be a no-brainer, but treating people like adults is a radical concept for this nanny-state administration.