Many of the health insurance plans sold through the Affordable Care Act's (ACA) exchanges will offer limited choices of doctors and hospitals, a move that insurers say will help keep down premiums, Anna Wilde Mathews writes in the Wall Street Journal.
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Traditionally, Americans have been reluctant to accept curbs on their health care choices. Health-maintenance organizations (HMOs) accounted for less than 5% of consumer plans sold through eHealthInsurance.com in 2012, and a Kaiser Family Foundation survey found that just 16% of workers with employer-sponsored health insurance were enrolled in HMOs.
However, insurers are betting that consumers looking to buy coverage on the exchanges will be willing to forgo some flexibility in exchange for lower premiums. Plans that opt to limit their provider networks typically offer lower premiums because they have either excluded the most expensive providers or insurers have negotiated discounts with participating providers in exchange for routing them more volumes, Wilde Mathews writes.
For example, plans participating in Covered California—the Golden State's health-benefits exchange—were able to keep their rates low by following a narrow-network strategy.
A McKinsey & Co analysis of 955 consumer exchange-plan filings from 13 states found that 47% were HMOs or similarly designed plans, which have narrow networks of providers and typically do not reimburse for care provided outside their networks. Meanwhile, many of the plans labeled as preferred-provider organizations (PPOs) also limit doctors and hospitals in their networks.
At the same time, health insurers are expected to include other limits aimed to control costs. For instance, patients may need to obtain referrals to see specialists or obtain prior authorization for costly procedures, the Journal notes.
"Individuals are making a lot of choices based on cost, particularly because it's coming out of their pockets," says Steve Hamman, vice president of Blue Cross and Blue Shield of Illinois (BCBSIL). BCBSIL will offer plans with smaller provider networks that will cost between 20% and 30% less than other plans it sells with a larger selection of doctors and hospitals.
Similarly, WellPoint plans to offer limited networks that cost 10% less than plans with larger provider selections. In New Hampshire, the insurer will be the sole carrier in the state's consumer exchange, offering plans that include 14 of the 26 hospitals and 65% of the primary care physicians that are in the insurer's largest PPO network.
WellPoint says the limited networks "have the potential to produce cost savings and continue to offer quality care and convenience" (Wilde Mathews, Journal, 8/14).