I was just reading that Obamacare will likely lead to some health insurance choices with small networks. Apparently, the smaller the network of doctors and hospitals, the lower the cost to the insurance company, and thus lower premiums for consumers. The article was about health insurance for people under-65, but there is already a movement within the Medicare Advantage business towards smaller networks.

In Tucson, CareMore has led the way with a smaller network than the other Medicare Advantage plans in town. For 2013, Health Net has added its own smaller-network plan while keeping its long-running plans that offer a very large network of doctors and hospitals.  The small-network plans have lower co-pays for doctor visits and hospital stays than do the big-network plans.

I was talking yesterday to a woman who had thought about enrolling with CareMore because she could save money on her doctor visit co-pays and oxygen costs. But she was afraid to enroll in the CareMore Breathe plan because her primary care doctor is not in the network and she doesn’t want to leave him.  So she remains in a Medicare Advantage plan that has a $45 co-pay to see a specialist. She had to go to three specialists last month, so that cost her $135.

This woman, who lives on her $1,500 per month Social Security check, could have changed to a less expensive Medicare Advantage plan during the Open Enrollment Period – but she was afraid to change.

The Kaiser Health News article is about a business strategy for the under-65 health insurance market, but it sounded very similar to a movement I see in Medicare Advantage. Some interesting points made in the Kaiser Health News article were:

***Insurers contend that by limiting network size, they can offer plans with higher quality or more efficient doctors and hospitals, which might slow spending or improve care.

***Because such policies can offer lower premiums, insurers are betting they will appeal to some consumers, especially younger and healthier people who might see little need for more expensive policies.

***Plans may also benefit from offering such policies because they are less attractive to those with medical problems, who can no longer be turned away beginning in January 2014.

***Networks are already part of most health plans. For doctors and hospitals, joining a network brings in business. In exchange, they agree to negotiate their prices with insurers.

The statements from the Kaiser Health News article apply to small-network Medicare Advantage plans.

When I meet a person turning 65 who is healthy and has not been to a doctor in years, the network of doctors and hospitals is of little concern to that person.  But when I meet someone with lots of health issues and a long list of doctors, that person wants a Medicare Advantage plan with a big network – if he is thinking about enrolling in Medicare Advantage vs a Medicare supplement. (Note: I would advise a Medicare supplement for such a person.)

With 45% of Medicare beneficiaries in Pima County already enrolled in a Medicare Advantage plan, I meet lots of people who are upset with the ever-rising co-pays – but they are reluctant to switch to a lower-cost plan because they don’t want to change their doctors.

With Medicare Advantage, there are plenty of plans from which to choose. I would think  more seniors would choose to save money and limit their medical bills – but most do not.

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