Health insurance is complicated and complex. If it wasn’t I would not be have my current job. We need to think and speak with clarity when we think about trade-offs. There are two sets of trade-offs that are often conflated. The first is provider network adequacy. The second is provider gatekeeping. These are two very different concepts and should not be used as proxies for one or the other attribute.
An adequate network is a set of contracted physicians, hospitals, and other medical providers that can reasonably provide appropriate services to most people in an affordable and timely manner. You will note that I’m aggressively staying away from precise definitions and quantification. A big network with a lot of doctors might be adequate. It might not be. A tiny network could be pragmatically amazing or hideous and horrendous. For most of the 2010s, my insurance had narrow networks, with at most 30% of the doctors and hospitals in the region in the network.
I had really good networks though that were readily adequate. My first network was effectively any place with a UPMC logo on the side of the building. My PCP was literally a 3 minute walk from my house and my physical therapist who made sure my ankle was not a complete mess was 1 exit down the Parkway East on the same side of the Squirrel Hill Tunnel. The maternity hospital was 6 minutes west of us, and the community hospital was 15 minutes east. Once I moved to academia, my network changed to any building with DUKE on the side. If I needed access to care, I could quickly make acute care appointments and the few specialty visits I or my family needed were easy enough to schedule. These were good networks for me even as traditional measures of network size and breadth would say that these were small and potentially low value networks.
Now if someone lived in Bradford County Pennsylvania and had the skinny UPMC employee plan, then the networks might not be that good as there were few UPMC hospitals or docs on the PA-NY border but this is an individual level analysis. Urban residents can likely find good to them networks in situations where the network has a small percentage of all available docs and hospitals in the region. Rural residents likely need broader networks because there are just far fewer docs and hospitals in rural areas.
The other thing we need to keep in mind is that some networks are restrictive and others are YOLO. Strict Health Maintenance Organizations (HMOs) require gatekeeping and prior authorization for anything more than a primary care visit. Furthermore, an HMO will not (normally) pay for any out of network care. On the other extreme, a Preferred Provider Organization (PPO) will allow any appointment to be made and it will pay something for out of network care. All else being equal, a PPO is substantially less restrictive than a strict HMO and from purely an option value perspective, a PPO is likely more valuable than an HMO all else being equal.
However an HMO can plausibly offer a massive network that is pragmatically excellent while a PPO can offer a local network that is tiny and barely useful. The opposite can be true as well. There is nothing about the plan organizational types that dictate network size or usability.
We need to keep these value factors distinct when we think about plan quality and access to care.
jonas
Thanks for this, Dave. Speaking of networks (and apologies if you’ve recently addressed it and I’ve missed it), what’s your take on the whole issue of “ghost networks”? Are insurance providers really not able to keep track of this stuff in real time, or is it just resource-intensive ( = $$) to do so, so they give it low priority?
ProPublica recently had a devastating story about a young man trying to find an in-network therapist that would take his insurance and there basically were none, even though his provider boasted of having all these people in their network. It doesn’t end well, unfortunately. The Biden administration has finally stepped up to do something about this, but it’s not clear if the new regs have enough teeth to actually make the insurers do anything.
bluefoot
Thanks for this. This has special relevance to me right now since I just accepted a new job. I’m in the middle of needing some ongoing medical treatment and I’ve been considering staying on COBRA (I was laid off a while back) until at least the end of the year since my current plan and network are excellent, and from what I hear the new employer’s less so. COBRA is freaking expensive though but may be worth it for right now.
Butch
I’m wondering how this analysis applies when there’s only one insurance provider. We have no choice under the ACA but to use Blue Cross. One member of the household recently underwent surgery; Blue Cross paid $46 toward $2,179 in outpatient costs and less than half the cost of the surgery, citing a whole bunch of deductibles and exclusions, and the response if you try to complain is typical of a monopoly – basically “what do you think you’re going to do about it?” (The staff at the state insurance commission view it as their job to answer the phone and tell you there’s nothing they can do, so they’re no help.) I’m really not sure I’m even going to bother renewing the ACA insurance. We’re a low income household so these bills really hurt.
dr. luba
I had an HMO for years (HAP via the HFH system in Detroit area), which, while a huge system, and often excellent, did have access issues. I started as an employee, switched to a private plan via COBRA in 1998, and stayed on until the ACA allowed me to have other options (lots of preexisting conditions).
I had one of the best urologists in the nation take care of my renal cell carcinoma. But dermatology appointments could take months to get, and I had to drive across town to get timely PT. The center near me was always booked up months out.
Let’s just say I LOVE Medicare. And not Advantage–as we in the medical field say, friends don’t let friends sign up for Advantage!
Anonymous At Work
PPOs seem to be more useful in urban areas with dense healthcare services. I’d also look at vacancy rates at hospitals and market share. The PPO I have in South Florida is incredible with the exception of scanning/diagnostic costs than run through a highly monopolized service. South Florida has a lot of healthcare providers and hospitals but has a high vacancy rate on its hospital beds.
I’d imagine the opposite is true, that HMOs are great for areas with less dense coverage because they are cheaper, the doctor networks can be extensive geographically, and any trip for specialized services is more likely to be a big deal to use for the patients as well as obtaining that PA.
Course, I could be spit-balling and totally wrong at the macro level.
LanceThruster
#M4ANOW
Mental dental vision health prescriptions disability hospice care
Saves lives, saves money.
The continual gaslighting of “access to healthcare” might as well be “concepts of a plan “
David Anderson
@LanceThruster: tell me how to get 218-51-1-5
Until then, I’m going to work to make things better as best I can.
bluefoot
@Butch: This is something I’ve been thinking about as well. As I was job hunting, it became obvious that in some instances or geographical areas, only one or two insurance providers were available. Which means you’re pretty much stuck. I don’t know how to work with or around that.
WeimarGerman
@David Anderson: Any thoughts on how to protect people when their insurance and hospital gets in a mid-year spat over costs so the hospital refuses the insurance and the insurance declares the hospital out of network?
Why is that not an event that allows you to chose a new plan?
Why can that happen outside of open enrollment? I should be contracted with the network available when I agree to 12 months indenture to the insurance premium and that deductible – no changes allowed.
And please DOJ hurry up that UnitedHealth Group anti-trust suit!
Chris T.
A somewhat idle question (and maybe dead thread) but… well, let me observe the following:
I went for a Gold Band plan via the recommendation of the WA-state site. It was costing me just about $2700/mo. With SU switching to Medicare (for ~$400/mo), I expect the next month to cost about half ($1350, give or take) … but it’s projected to be at least $100 cheaper.
The question is: why? In any sane system based on risk, I should be more expensive, not less expensive.
(And in another few years my own monthly cost will drop by an absurdly large $800-ish. Perhaps some of my prescriptions will go up, but on the other hand, empagliflozin is about to become significantly cheaper some time next year.)
David M Anderson
@Chris T.: ACA plans are priced on age so your partner at age 64.999 had a higher premium than you at age 62 or 63. The age rating curve is very steep at the older ages.
And you’re right, under an experienced rated system, you should cost a bloody fortune and your partner should be fairly cheap, but we have very few individual level experienced rated products. Employer sponsored insurance is a group experience rated product, Medicare is a heavily subsidized group experience product and ACA is community rated.