Employers and insurers are increasingly moving to such plans in response to growing hospital costs and employees' resistance to closed-network health plans. In a tiered network plan, employees are given an option of using a "core" network of hospitals or a "premium" network, based on their costs, quality or structural characteristics, such as whether they are an academic medical center. Enrollees can choose to pay lower coinsurance rates or co-payments for choosing low-cost hospitals and higher coinsurance or co-payments for choosing higher-cost hospitals.
The Web forum at www.healthaffairs.org grew out of a roundtable on the hospital tiering trend sponsored by Health Affairs and CHCF. Three of the four articles were adapted from presentations made at the roundtable, while the fourth sums up lessons from the roundtable.
In the forum's lead article, titled "Hospital Tiers in Health Insurance: Balancing Consumer Choice With Financial Incentives," James C. Robinson, a professor of health economics at the University of California, Berkeley, says "Employers and insurers want to increase enrollees' sensitivity to price variations between hospitals, something from which enrollees have been insulated in the past because the benefits were the same no matter which facilities they choose."
"Today, similar to prescription drugs, employers are asking insurers to design coverage products that give incentives to cost-conscious consumers to choose lower-cost facilities," Robinson says. "This will put indirect pressure on hospitals to moderate their prices."
According to Jill M. Yegian, senior program officer with CHCF, "Tiering and other changes in product design raise complex questions concerning these product features' potential to reduce system costs, consumers' ability to understand the cost and quality implications of their decisions, and financial barriers to care for the chronically ill."
Other findings of the forum:
The package can be read at www.healthaffairs.org/WebExclusives/CHCF_Web_Excl_031903.htm .
Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research.
The California HealthCare Foundation based in Oakland, is an independent philanthropy committed to improving California's health care delivery and financing systems. For more information, visit www.chcf.org .
Health Affairs