When you use the term 'insurer' you're really talking about so-called managed health plans. If you allowed for real insurance to be in the market; meaning you build-up your accounts and truly get 'incentivized' for getting in early, then one can have great health care when they actually need it. Otherwise, the market should be based upon what people pay out of pocket. Those are the two factors that should be influencing price and not the nonsense regulations that artificially drive prices way up. You have people having to pay two day's pay for a regular five minute doctor's visit the way the system is now.
Managed care was a market response to rising costs. Back when it was the market standard to pay providers whatever "usual, customary and reasonable rates" they charged, most states moved in the direction of directly setting (or at least) overseeing provider--particularly hospital--prices for expensive services to control costs.
Those heavy-handed regulatory systems gradually faded away, except in Maryland, in no small part because with the emergence of managed care strategies it was thought the market could do a better job than the regulators. So instead of bureaucrats scrutinizing prices, they relied on private actors in the marketplaces to determine reimbursement rates for high-cost services through negotiation.
As long as insurers continue to exist (and that's not necessarily a given in the long run) it doesn't matter what kind of product you buy from them--HMO, PPO, POS, EPO, whatever--those insurers are going to negotiate rates with health care providers. And the more successful they are in bargaining those rates down, the lower the premiums they can offer.
This is true even if the move to HDHPs/HSAs continues (which it's likely to--I pointed that out 4-5 years ago as a likely outcome of the ACA). Greater consumer price sensitivity for services priced under or near the individual's deductible will put downward pressure on the prices of such services. And there will be more and more of those services so affected as deductibles climb. That's good!
But there are always going to be services with costs and prices above the deductible and the bulk of spending and revenue is going to remain locked up in those services. You're not going to be able to rely on people directly shopping around various providers for those services the way people will with lower-priced services, outside of certain limited schemes like reference pricing. That's where the insurer-provider negotiation remains critical.
The better bargain an insurer can get on health care prices, the lower they can price their own insurance products. And if you've got well-functioning insurance markets in place where individuals price shop for plans on their own, then that incentive to offer the most competitive premiums is big.
That's why competition is important and these are the dynamics that have already started to emerge. Look no further than earlier this year.
Here's a first: January hospital prices lower than a year ago
The prices that health insurers paid to acute-care hospitals declined in January compared with the same month a year ago, a first since federal officials began to collect such data.
“This appears to be a combination of the public sector pressure, but an even more fierce change on behalf of the private payers,” said Paul Hughes-Cromwick, a senior health economist at the Altarum Institute Center for Sustainable Health Spending.
“Insurers are trying to figure out how they can save healthcare cost by lowering the hospital bill, so they are more aggressively bargaining with hospitals and more aggressively investing in programs that lower hospital utilization rates,” said Neraj Sood, director of research and associate professor in health policy and economics at the University of Southern California.
