What does "network discount" mean in health insurance?

In health insurance, a "network discount" refers to the reduced rates negotiated between insurance companies and healthcare providers within a specific network. This negotiation aims to lower the costs of healthcare services for policyholders who use providers that are contracted with the insurance company. By creating a network, the insurer can offer lower premiums and out-of-pocket costs for its members, incentivizing them to seek care from providers who agree to accept these discounted rates. This arrangement ultimately benefits both the insured individuals, who enjoy reduced costs, and the insurers, who can manage their risk and expenses more effectively.

The other options revolve around different aspects of health insurance that do not directly apply to the concept of network discounts. For instance, mandatory coverage pertains to the required benefits that must be included in a health plan, a fixed price refers to situations where a specific amount is paid for a service regardless of provider negotiations, and full price indicates that there are no discounts applied based on network participation. Each of these highlights different elements of health insurance but does not capture the essence of what a network discount represents.