McKinsey’s Latest Research on ObamaCare Networks: Not So Bad After All?
McKinsey, the consulting firm that first brought the fact that ObamaCare plans have narrow provider networks to public attention, has just released an updated Intelligence Brief that suggests (at first glance) that the situation is not as dire as we thought:
In general, narrowed networks appear to be an important and effective cost-control lever for payors. We found 292 instances in which the same payor is offering two networks of different breadths (ultra-narrow or narrow network versus broad network) in the same rating area, on the same metal tier, and within products of the same type (i.e., HMO, PPO, EPO, POS). In these instances, the median difference in premiums between the narrowed and broad network products ranges from 13 to 17 percent ($29 to $59 per member per month) across tiers. The maximum difference in premiums ranges up to 31 to 53 percent ($84 to $125 per member per month).
So, are narrowed networks fine because they have lower premiums? Not quite: A large proportion of enrollees seem to be poorly informed about access to providers
in their plans:
Twenty-six percent of the respondents who indicated they had enrolled in an ACA plan were not aware of their selected product’s network breadth. This lack of awareness was highest among previously uninsured respondents23; they were more than twice as likely as previously insured respondents to be unaware of network breadth (41 percent versus 21 percent, respectively). Among the respondents aware of the network breadth in their plans, close to half (42 percent) indicated they purchased a narrowed or tiered network. This rate was also higher among the previously uninsured than among those previously insured (45 percent vs. 40 percent, respectively). I In our survey, 42 percent of those who indicated they had enrolled in an ACA plan and were aware of their network type reported purchasing a product with a narrowed network.
This Intelligence Brief is the most thorough, information packed, analysis of ObamaCare’s provider networks that I have seen. I commend it as an excellent piece of research. Nevertheless, I think it over reports the number of broad networks available because it defines a “broad network” as one with 70 percent or more hospitals in an area. By definition, a rural area with only one hospital has to contain only “broad networks” according to McKinsey’s definition, and one with only two hospitals is highly likely to contain only them. I don’t think that’s really what most people would consider a broad network, and such situations prevail in 104 of 501 rating areas nationally, which contain 8 percent of the addressable population. The largest cities, on the other hand, have a prevalence of narrow networks of 60 percent (p. 5).
There is nothing wrong with narrow networks if enrollees knows what they are getting. Exclusive networks are a way to negotiate better deals with providers competing to be included in the network. Where it gets tricky is when enrollees don’t bother to read the fine print and then suddenly learn their doctor is not in the network. I tend to prefer networks that aren’t closed — but enrollees are encouraged to seek care at the providers who have offered better deals through cost-sharing. That is how the experiment worked in California with CalPERS and WellPoint.
I agree Devon. Patient knowledge really is key, and this study points out that the previously uninsured are less knowledgeable about the details of their plans. While one of the ACA’s goals was to help those people finally get insurance, evidently getting them educated about the product they were buying has not been a successful endeavor so far.
“While one of the ACA’s goals was to help those people finally get insurance, evidently getting them educated about the product they were buying has not been a successful endeavor so far”
This is usually the largest hurdle when implementing a complicated new policy. However, informing the public takes time and cannot be done quickly within a year.
I think the issue with the narrow networks is that enrollees are not informed, which is obviously the case. As long as enrollees know what they are getting and can find coverage.
While understanding that they will likely not be able to keep their doctor.
Which goes back on what Obama promised. They would be able to keep their plans and their doctors, and that hasn’t been the case. They have lost their doctors due to the narrow networks. That’s most of the criticism.
The real problem in CA was that the large carriers did not have accurate lists, easily accessed by consumers to know which providers were in and which were not included.
It was a crap shoot to pick a plan. I had 2 choices so it was a roll of the dice.
Now that it is actually in force it turns out some of my favorite doctors are in one plan but not the other. To have full coverage I need to buy both plans.
The question for the socalled PPO plans is why is a provider included in one but not the other companies PPO. I understand high cost doctors rejecting insurance payments but why are the companies excluding so many providers?
I can’t wait until I’m old enough for Medicare so I don’t have to play this game of provider roulette.
Medicare is no panacea. It has a lot of plans that offer different networks. They are called Medicare Advantage plans. Obamacare is adding Accountable Care Organizations.
Due to low reimbursements and rigid rules, some physicians and hospitals refuse to accept Medicare assignment. If the government does cut reimbursements as promised this number will grow.
The problem is that even with accurate lists there’s no way to really tell if a network is adequate before you get sick.
There are plenty of not so uncommon medical problems that only one or two people in a region specialize in. Not in your network? Well it was a fine network before you developed the problem, now, not so much.
PPO networks pre-Obamacare tended to be broad. When spending their own money, people tended to buy plans that had big deductibles for little stuff and offered complete coverage with broad networks for big, expensive, medical problems.
Obamacare, with its mistaken emphasis on requiring coverage of all sorts of routine, and worthless, basic stuff drives premiums up.
People look at the premiums, are required to buy or else by the individual mandate, and don’t have the luxury of considering whether the plan they are buying actually has any physicians in it. Insurers respond to where people put their dollars.
That’s why so many cancer patients have been left in the lurch.