we here in NW suburban Chicago are seeing a palpable degradation in the quality of care being offered by BCBS narrow networks. My family (non-subsidized) felt driven onto a far more expensive Silver plan rather than stick with last year’s narrow-network Bronze, as we have seen with our own eyes in the past 6 months what looks like hospitals/docs in the narrow network having the life squeezed out of them by the dominant insurer….
This is a really good question. Let’s start with some data and then theorizing.
The University of Pennsylvania LDI team tracks network size on the Exchanges. Their most report showed that the super narrow networks are becoming less common:
We find that the overall rate of narrow networks is 21%, which is a decline since 2014 (31%) and 2016 (25%). Narrow networks are concentrated in plans sold on state-based marketplaces, at 42%, compared to 10% of plans on federally-facilitated marketplaces. Issuers that have traditionally offered Medicaid coverage have the highest prevalence of narrow network plans at 36%,
I think the major thing we need to think through is the incentives of pricing structures. Narrow networks, all else being equal, will have two sources of pricing advantages over broad networks. First, the narrower the network, the less likely it will include all the doctors and facilities that a person who knows that they need a lot of care will want to use in the network. This aspect of a narrow network drives some people who are disproportionally expensive to choose the broader network. Secondly, the narrow network is a subset of all available providers in a regional broad network. The narrowness gives the insurer a stronger ability to say no which means the average cost per unit of service can decrease.
The ACA subsidy formula gives a push for relatively healthy, subsidized individuals to buy the least expensive plans possible. This probably means either the least expensive or Benchmark Silver plans for people who qualify for Cost Sharing Reduction (CSR) help or Bronze plans for people who make more than 200% (~$24,040) and less then 400% (~$48,080) FPL.
We know that most subsidy receiving individuals who are buying on the Exchange are post-subsidy price sensitive. Owning the #2 Silver and then seeing a large gap between #2 Silver and the first competing Silver means that almost every price sensitive shopper who is healthy (as they don’t need a broad network) will buy Celtic/Ambetter. Individuals with known medical conditions are less likely to go to a narrow network plan because they already have relationships with providers that work for them. It is an attempt to buy healthy membership and dump sicker people to other insurers.
In these markets where there is a Mediciad-esque narrow network insurer, there is a strong incentive for every insurer to make their networks smaller and cheaper so as to claw back some of the reasonably healthy membership that otherwise would have gone to the hyper narrow network insurer.
This is the incentive to continue to go narrow and cheap. Most people don’t use many services so they are buying on premium more than anything else so steps that lower premium are valued by the insurer more than steps that make the experience pleasant.