Less Expensive Insurance Means Less Thorough Coverage

Earlier this month, I predicted that, if allowed to stand, Massachusetts Governor Deval Patrick's rejection of 90 percent of the state's health insurance premium hikes would result in "service cuts [and] reduced coverage." Well, a judge said that insurers had to comply and post new prices. And now we're seeing the state's health insurers look for ways to… cut services and reduce coverage in order to bring down rates.

Health insurers are starting to sell policies that largely bar consumers from receiving medical care at popular but expensive hospitals such as Massachusetts General and Brigham and Women's—a once radical idea that is gaining traction as a way to control soaring health care costs.

Governor Deval Patrick and Senate President Therese Murray have included such restricted provider networks in their recent legislative proposals to control rising insurance rates.

This is in a state where there's already a shortage of primary care physicians, and where, despite some recent overall state improvements, the capitol city leads the country in doctor wait times.

Now, I don't think that individuals should necessarily have more or less coverage. But the effect of the state's rate rejections is to further restrict choice in a marketplace that, thanks to burdensome coverage mandates and tax policy that ties insurance to employment, already offers most consumers somewhat limited options. The state isn't controlling costs by creating greater effiency in the system; it's just (indirectly) knocking more expensive coverage off the list of available choices.