Final answer:
A network provider has an agreement with an insurer to offer benefits at negotiated rates, ensuring access to affordable care for insured individuals. Insurance companies leverage their large client base to negotiate these rates, which benefits both the insurer and the insured. Models like HMOs and fee-for-service impact how resources are allocated and how premiums are set.
Step-by-step explanation:
A health care provider or a group of providers that has entered into a written agreement with an insurer to provide benefits under a health insurance policy is typically referred to as a network provider. These providers ensure reasonable access to health care services for the insured individuals. Because insurance companies have a large customer base, they can negotiate more favorable rates with health care providers than an individual could on their own. This system is cost-effective for the insured, as it offers lower prices, and it's also advantageous for the insurer, as it reduces the costs associated with claims.
Various models exist for how these providers are reimbursed, such as the fee-for-service model where providers are paid based on the individual services they deliver, and models like Health Maintenance Organizations (HMOs), where providers are paid a set fee per patient regardless of the number of services provided. This has implications for resource allocation among patients. Moreover, issues like adverse selection can impact the insurance market, where there is an asymmetry of information between the insurer and the insured, potentially leading to higher costs for the insurance company.