Obamacare to begin rating network size of health plans

posted at 2:01 pm on March 7, 2016 by John Sexton

If you like your doctor, HHS will create a rating system to show you that your doctor isn’t covered under the new, narrower network. That’s what the President promised us, right?

HHS is moving to make it easier for consumers to find out the size of the network of doctors and hospitals they are joining when they sign up for a health plan on the Obamacare exchange. The New York Times reported on the changes being made Sunday:

The Obama administration, responding to consumer complaints, says it will begin rating health insurance plans based on how many doctors and hospitals they include in their networks…

Many health plans offered in the public marketplaces provide a limited choice of doctors and hospitals, and some insurers narrowed their networks this year by excluding some doctors and dropping popular teaching hospitals.

Consumers have grumbled about the changes, and some say they have had difficulty finding medical specialists. But cost-conscious consumers have gravitated to these plans because they tend to offer lower premiums than health plans providing a greater choice of doctors and hospitals.

The Times notes that consumers have “grumbled” about the narrow networks but doesn’t point out narrow networks are not some unexpected new outcome of Obamacare. In fact, this aspect of the President’s policy was an inevitable part of the design and has been reported on for several years already. Here’s the Washington Post writing about this from November 2013:

As Americans have begun shopping for health plans on the insurance exchanges, they are discovering that insurers are restricting their choice of doctors and hospitals in order to keep costs low, and that many of the plans exclude top-rated hospitals…

That’s forcing people such as Michael Justice, 63, a Web developer from Peterborough, N.H., to leave doctors they like. Justice has been treated by primary-care doctors, cardiologists, orthopedists and eye doctors affiliated with Monadnock Community Hospital in his town for 15 years, and his wife for 30 years. But starting in 2014, that medical center will no longer be in network for the Anthem plans sold in his state, whether he buys the insurance through the health exchange or on his own.

As insurance industry expert Bob Laszewski explains, creating smaller networks has become one of the only ways left for insurers to vary plans and thus prices:

In the old health insurance market, insurers competed for business through price and plan design. Network size has historically been a minor factor with consumers and employer plan sponsors expecting to be able to use about any doctor or hospital, especially those with the best reputations.

But with the Affordable Care Act, health plans lost two of their historically big plan pricing variables; medical underwriting and plan design.

Under Obamacare, insurers can no longer underwrite, or exclude people, to keep the cost of their individual market health insurance plans down––a good thing.

Under Obamacare, insurers can no longer offer a wide variety of health insurance products in the individual health market––a good thing when it gets rid of the worst of the health plans out there but not such a good thing when it gets rid of the many policies people could choose and have liked and are now mad about losing. Now, all health plans have to fit into four strict boxes: Bronze, Silver, Gold, and Platinum. And, these boxes can only differ by out-of-pocket costs––not benefits.

So, if a health plan can no longer vary its benefit choices, how can it distinguish itself on price? A big variable therefore becomes the provider network.

In the long run having networks choose not to include expensive hospitals and doctors could pressure those hospitals and doctors to bring their prices down a bit. Of course that’s not the sales pitch we were all given. “If you like your doctor, you can keep your doctor,” the President said back in 2009. Now we’re at the point where HHS is creating a new rating system to help people get an idea just how small their new Obamacare network really is.


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