Arizona Health Insurance Practice Exam

What is a common method for insurers to manage healthcare costs?

1. Offering unlimited coverage options

2. Restricting services to network providers

3. Encouraging free choice of any provider

4. Eliminating all co-payments

The correct answer is: Restricting services to network providers

Restricting services to network providers is a common method for insurers to manage healthcare costs. By doing so, insurers can negotiate lower rates with a select group of healthcare providers within their network. This arrangement helps to keep overall costs down because network providers agree to provide services at discounted rates in exchange for the volume of patients they receive through the insurance plan. Moreover, by directing members to use network providers, insurers are able to maintain better control over the quality and cost of care. This can result in more predictable spending for the insurance company, thereby stabilizing premiums for policyholders. It also encourages patients to seek care from providers who are familiar with the insurer's plan and who adhere to the policies and procedures that the insurer has established. In contrast, unlimited coverage options, encouraging free choice of any provider, and eliminating all co-payments could lead to higher healthcare utilization and costs for insurers. These approaches remove key cost-control measures, potentially leading to increased premiums and unsustainable healthcare expenditures.