Public Marketplaces Offer Narrow Network Plans for Lower Premiums

03/11/2014

Health insurance purchasing activity taking place in the marketplaces have been largely based on price, not network size according to a recent Kasier Family Foundation study. This may be because the individual market (which makes up the majority of patrons shopping on the public marketplaces) have always been more price sensitive versus the general public consumer. According to Kaiser, “While the general public prefers more expensive plans that cover a broader range of doctors and hospitals, 54 percent of those who are uninsured or who buy their own coverage select plans that cost less, even if they have less say in providers. Only 35 percent of that group would pick a more expensive, broad-network plan.”

More specifically consumers on the health insurance marketplaces are purchasing so-called “narrow network” plans that force consumers to forgo flexibility for competitive price. This is not surprising given that approximately 70% of health insurance options available on the public marketplaces offer narrow networks. Insurance companies that offer health plan options on public exchanges needed to create products that offered the ultimate in managed care where costs are contained by deeper discounts offered by fewer providers. This is where consumers will get more coverage for their premium dollars as long as they are able to stay within a small circle of medical providers. The Department of Health and Human Services mandated that narrow networks offered in health plans on the public marketplaces encompass 20% of medical providers available in a given community. This percentage may increase to 30% next year, but premiums will increase.

It may become the new norm. Small employers have also taken notice of the narrow network philosophy and will undoubtedly begin shopping for products in that space to ward off unpredictable premium hikes that have been plaguing them over the past few months. “It is important to ensure patients can continue to benefit from the high-value provider networks health plans have established, which are helping to improve quality and mitigate cost increases for consumers as the new health care reforms are taking effect,” according to America’s Health Insurance Plans.