This is a free enterprise nation. It’s called Capitalism.
Where there is money flowing into a market, there are going to be businesses competing to get a slice of that money.
Businesses will compete for it. Each will carve out a segment.
Look at Medicare. The government pays only so much for services, but there are more than a few companies that compete for the business. They have structured different plans. People opt for different plans.
Some contract with hospitals. Some have their own facilities.
If Medicare is that competitive, and it is rather iron clad due to the government determining how much it will pay, then general insurance is going to be competitive too.
Look at all the pharmacies out there competing for our medication business. They each get paid pretty much the same by the government, but they still compete and offer different services, in addition to the medication services.
Some offer flu vaccine shots. Some have other deals.
More competition, will open up more choices. Plans, fees, other services tossed in, this is the goal. It will happen.
In the first place, Medicare decides what it will pay for services. It publishes a schedule and doctors by law can't charge more. They are also limited to their ability to refuse Medicare patients. So Medicare has mandated its own network. It controls its own costs. The out-of-state insurance company that I contact doesn't have that. It has no network in Missouri and no way to control its costs.
Second, the insurance company is only managing claims for Medicare. They aren't paying claims out of their own pocket, they are telling the government that they processed X million dollars of claims and the government reimburses them. The insurance company gets paid for its services. So from an insurance company point of view it's pretty easy money. They bear none of the risk. They get paid by the government for each client they sign up. The more they sign up then more they make. Nice gig. But the out of state insurance company bears all the risk. It pays claims out of its own pocket. It makes money when the premiums they collect exceed the claims they pay. Networks are a vital part of allowing them to control their costs, predict their risk, and set their premiums. If I come along from a state where they have no network then they pay what the doctor charges. Their risks are not limited and their expenses are not predictable. In all likelihood I would cost them more than their average client so their chances of making any money off the premium then charge is very slim. So there is no incentive for them to take me on as a client. And again since my costs are higher there is no incentive for me to sign up with them.