The Hidden Cost of Choice in Healthcare
For years, health plans have advertised the breadth of their network and the ability to provide choice as their greatest selling points. You can see any provider or receive care at any hospital you want. While that certainly seems like a value add, it almost always comes with a trade-off. A reduced ability to manage costs and outcomes.
What is rarely acknowledged is that healthcare has treated choice as an unquestioned virtue, without fully accounting for how expanding optionality undermines the very outcomes plans, employers, and members are trying to achieve.
In most markets, choice is associated with competition. More options are supposed to discipline prices and reward quality. Healthcare borrows this intuition, but the system does not behave that way. The conditions that make choice effective in consumer markets do not exist in healthcare, where decisions are intermediated, information is asymmetric, and incentives are misaligned across participants.
As networks expand, they do not become more competitive. They become harder to govern.
Every additional provider in a network introduces another set of practice patterns, referral behaviors, pricing strategies, and clinical preferences. Each one is rational in isolation. Together, they increase the number of variables the system must coordinate. As those variables multiply, predictability declines.
Costs become harder to control. Quality becomes harder to standardize. Outcomes become harder to influence.
This is not a failure of analytics, contracting, or execution. It is a consequence of design.
Managing medical spend and outcomes requires alignment. Alignment requires repeatable behavior. Repeatable behavior requires limits.
Broad networks weaken all three. When exclusion is no longer credible, negotiating leverage erodes. When providers respond inconsistently to the same incentives, signal strength collapses. When nearly every site of care is available, steerage mechanisms lose force.
Preferred pathways may exist on paper, but in practice they compete with habit, convenience, and established referral patterns. Most lose.
Administrative complexity compounds the problem. Network breadth expands contracting, credentialing, fee schedules, disputes, directory maintenance, and data management. Plans invest heavily to administer relationships they cannot meaningfully influence. Vendors are layered on to manage the complexity, adding cost without restoring control.
Over time, leaders stop steering the system and start observing it. Some initiatives perform well. Others underperform. On average, results appear acceptable, but rarely decisive.
This is where the promise of choice quietly breaks down.
Employers believe they are buying flexibility, but experience it as rising premiums and opaque performance. Members believe they have freedom, but encounter confusion, inconsistent guidance, and little clarity on what actually delivers value.
Choice, once a signal of quality and access, increasingly feels like noise.
And yet, it persists. Not because it reliably produces better outcomes, but because the costs of constraint are immediate and visible. Narrowing networks triggers pushback. Standardization creates friction. The downsides of optionality, by contrast, are diffuse and delayed. They show up as trend, variance, and chronic execution gaps rather than a single, attributable failure.
So optionality accumulates. And control erodes.
This is not an argument against access or against thoughtful choice. It is an argument against treating optionality as free.
Health plans that materially improve cost and outcomes do not attempt to maximize choice. They decide where variation is acceptable and where it is not. They reduce optionality where consistency matters most. They design networks that can be governed, not just marketed.
The hardest question for health plans is no longer whether choice is appealing. It is whether the outcomes they seek are achievable in systems designed around ever-expanding optionality.
In healthcare, choice often feels like value. But too often, it is the mechanism through which the ability to manage the system is quietly lost.