Could so called “narrow networks” be good for your health? As insurers look to hold down premiums one strategy they are using is to limit the number of choices patients have for doctors and hospitals. Cost is lower because insurers can negotiate lower prices and direct patients to doctors that deliver lower cost care. Last week at the Field Clinic, Dr. Drew Harris blogged that maybe this more limited choice might be good for patients. By limiting choice, patients would be more likely to see doctors that better coordinate their care. Better coordination would hopefully lead to better quality and better health.
I’m not sure if narrow networks will lead to better care but these plans are leading to insurance options with lower prices. Spending less on health insurance can certainly make people better off. But for narrow networks to work for consumers, two things will be needed. First, consumers need complete transparency about what doctors and hospitals are “in the network” and therefore “covered” in each insurance product. Second, they need the ability to access specialized care outside of that limited network if it is truly necessary. Let’s talk about the first.
The new marketplaces rely on competition to drive down prices. Narrow networks are one way insurers are trying to lower premiums. I think it is a good thing that patients can vote with their wallets and choose cheaper plans with less choice or more expensive plans with more choice. But for a market to work, the information has to be easy to find and understand. And this is where healthcare.gov could do better.
Right now, healthcare.gov does a pretty good job at showing consumers differences in cost sharing (deductibles and copays) among insurance plans. But comparing what doctors and hospitals you can go to in each plan is much tougher and in some cases incomprehensible. Frequently, consumers are forced to click through to insurer websites. If you’re lucky enough to find an accurate provider directory, it’s impossible to know who is accepting new patients. It’s just as hard to know who is missing from the directory and therefore excluded from the network. Without knowing who is excluded, it’s hard to know what you’re missing.
In the next year, healthcare.gov should find ways to present this information to consumers in transparent and easy to understand ways. Perhaps it could show hospitals on a map and indicate which ones are in and out of the network. I’m not sure that is the right way, but alternatives should be tested to find the most effective ways to deliver this information to consumers.
So long as consumers are given good information, I think letting people save money in exchange for limiting their choice is a good idea. But if consumers are making these decisions with bad or no information, then they will be stuck with plans that aren’t what they thought they were buying.
Editor's Note: Cross-Posted on the Voices@LDI blog of the Leonard Davis Institute of Health Economics of the University of Pennsylvania.