Pick your poison: Cost vs. choice in ACA marketplace insurance plans

First the good news: Three recent surveys this week triangulated to support the notion that the Affordable Care Act (ACA) is actually working to reduce the numbers of uninsured Americans, a major goal of the 2010 legislation. The Commonwealth Fund found that 9.5 million fewer adults are uninsured now than before the ACA went into effect; the Urban Institute’s Health Reform Monitoring Survey found a similar drop, with 8 million adults gaining coverage; and a Gallup-Healthways survey reported that the uninsured rate has fallen to 13.4 percent of adults, the lowest level since it began tracking health coverage in 2008.

{mosads}But, as The Wall Street Journal reported recently, ACA enrollment figures are only one measure of success of the new health law. It will take time to determine whether the first year sign-up includes a healthy enough mix of people to keep premiums and subsidies affordable next year. It is also unclear whether enrollees are happy with their new coverage. Although the Commonwealth Fund survey suggests that most are satisfied, these numbers are counterbalanced by emerging stories expressing discontent among the newly enrolled when they learn their new health plans limit access to a relatively small number of physicians and hospitals. In fact, a consumer advocacy group in California is bringing a class action lawsuit against insurance giant Anthem Blue Cross for misleading consumers about the availability of providers in limited networks. The ACA requires marketplace plans to have adequate networks of providers, but “adequate” is a fairly inexact and elastic term. At a minimum, narrow networks can create disappointments when longstanding patient-physician relationships are disrupted, but they can lead to real problems for people with unusual or severe conditions that depend on particular specialists in a given geographic region.

The health insurance trade group America’s Health Insurance Plans (AHIP) says that cost has the greatest influence on which plan a consumer chooses. Plans with narrow networks of providers are less expensive and for that reason were embraced by insurers who offered products on the ACA marketplace. A June 2014 analysis by McKinsey & Company found that 48 percent of the networks in ACA marketplace plans nationwide had limited networks, but, among the least-expensive plans, 69 percent had restricted provider choices. These plans were, on average, 17 percent cheaper than similar plans offering a broader selection of hospitals and physicians.

The Congressional Budget Office reported that the 2014 premiums for plans sold through the marketplaces were 16 percent lower than previously projected. It is not surprising that price-sensitive folks going to the ACA marketplaces with limited federal subsidies would be attracted to and choose less-expensive health plans, perhaps even if they knew they came with narrow provider networks. But here is the rub: A consumer survey conducted by McKinsey in April found that greater than one in four people who purchased ACA plans were unaware of the network type they had selected. This may partly explain the backlash from new enrollees about the restricted provider offerings, but it also suggests a need for greater disclosure and availability of information in ACA marketplace plans.

Narrow provider networks are not a new feature of the healthcare landscape. We saw them emerge in the early 1990s when managed care organizations used them to drive down health spending, but they were unpopular and ultimately gave way to broader network offerings. They remain in use today in large, self-insured employer-based plans trying to manage spiraling healthcare expenditures. Limited networks have the potential to provide value as well as excellent medical care if they are aligned with evidence-based guidelines and better outcomes. But without sufficient oversight and competition, they can inhibit access to timely high-quality care. The ACA put forward a regulatory and financial framework to encourage the blending of efficiency and care coordination and health insurers are promising to provide greater transparency and options in their narrow networks. However, right now it is unclear whether or not these system reforms will be enough of an antidote to the choice versus cost trade-off for many Americans who, when it comes to health care, want it all.

Engelhard is the director of the Health Policy Program at the University of Virginia School of Medicine’s Department of Public Health Sciences.