It’s Probably Not a Good Thing for Regulators to End Narrow-Network Plans

by Callie Gable

Plenty of Americans criticized the fact that health-insurance networks on Obamacare’s exchanges in 2014 were narrower than expected, but will they be happy if they’re regulated out of existence?

A few weeks ago, I wrote about how narrow-network plans may be a good option for cost-conscious consumers: 

Any measure that controls health costs without compromising access or quality could be a move in the right direction. Narrow networks remain one of the insurance market’s few remaining cost-control mechanisms — we’ll see how long regulators let them last.

As suspected, not very long.

Narrow-network plans lower costs by excluding the most expensive providers and offering customers fewer choices, increasing payers’ buying power. So what’s the problem? In terms of quality of care, there likely isn’t one.

But consumers are increasingly unhappy with the limited access low premiums buy. In some cases, networks don’t have access to certain doctors or hospitals with specialty units, like pediatrics or oncology. Some customers apparently realize that their plan doesn’t cover certain providers after unknowingly racking up thousands of dollars in medical bills for using out-of-network providers.

Obamacare already includes rules to protect customers from dangerously narrow networks, but according to the New York Times, the president and insurance regulators have apparently decided the original restrictions don’t go far enough:

Under the new standards insurers will generally be required to have contracts with at least 30 percent of ‘essential community providers’ that treat ‘low income, medically underserved individuals’ in their area. These providers include community health centers, clinics for people with H.I.V/AIDS and family planning clinics.”

Now, a similar system to the one that analyzes Medicare Advantage plan networks to ensure they are expansive enough will analyze the networks in the exchanges. It’s unclear just how far this will go, but networks will be subject to new rules about the number of providers in a network, patients’ travel times to providers, types of specialty providers in the networks, and more. Meanwhile, states are also considering regulations along these lines, in addition to the federal rules — Washington State already has, the Times notes.

Nearly half of all plans offered on the exchanges are narrow network options, so this could mean higher premiums in the future — even higher than existing Obamacare regulations have already forced — for millions of Americans. So it’s quite possible, in many cases, wider networks might not actually increase access to care.

While access is important, better (or just more convenient) access could come at the cost of potentially unaffordable premiums, it seems unlikely that access will be meaningfully improved. It’s a shame that higher premiums forced consumers into narrow-network plans they may not have wanted, but complaints about those plans could backfire if it just leads to more costly regulations.