Narrow networks aren’t new

A Modern Healthcare article has an extensive piece on initial Exchange consumer reaction to narrow networks.  Besides wanting better web directories, people are relatively happy with them. However there is a throw-away line at the end concerning the proliferatin of narrow networks on the commercial/employer sponsored insurance side of the business that I think is wrong:

Jon Gabel, a senior fellow who studies insurance markets at the National Opinion Research Center at the University of Chicago, told Modern Healthcare in March that if narrow networks “spill over into employer-based health insurance, I think we’ll see much more politically potent backlash.”

As I noted last July, most of the popular plans sold to groups by Mayhew Insurance are narrow network or tiered network plans. 

Note that the three commercial networks which are the top sellers by membership are narrow to very narrow networks and they were all fundamentally built when President Obama was either a state senator or a junior Senator in D.C.

I think he is wrong for two reasons.  First, the big trend for large groups and Fortune 1000 companies over the past several years have been to keep employee contributions reasonably stable while jacking up the deductible.  Companies that were offering low Platinum or good Gold style plans in 2012 are now offering weak Silvers as the base option.  A lower deductible but narrower network option at the same employee contribution per paycheck is a trade-off a lot of people are willing to make on an individual basis (that is what I choose for my family). 

So on the first front, narrow networks have been around for a while and they have been common for large groups for at least a decade in my market.  Secondly, as long as the networks are well disclosed, directories frequently updated and the narrow network is not the default or only option, but instead are a part of a set of choices, I don’t think there will be a potent backlash.

6 replies
  1. 1
    Edmund Dantes says:

    We all knew it was coming, but it never ceases to amaze me how good the propaganda is at disseminating itself.

    “Every old problem with the healthcare system never existed till obamacare messed up our perfect system. “

  2. 2
    aimai says:

    I don’t know whether our network is narrow or not but several years ago pre Obama Mr. Aimai’s company (which is in California though we live in MA) shifted everyone (small hi tech company with about 50 people working in it) to a very high deductible plan. Its 6000 dollars before they cover anything not related to our young children and its impossible for me to figure out what they will or won’t cover until after it has happened. We basically pay for everything unless there is an enormous health hit (which did happen to us one year).

  3. 3
    Baud says:

    Apple pulls iOS 8.0.1 after users report major problems with update

    It’s a train wreck! Repeal and replace!

  4. 4
    BubbaDave says:

    @Edmund Dantes:

    Yep. Listening to our annual WebEx from my employer’s HR the last couple of years I’ve learned that every rate increase is due to the Affordable Care Act but out of the goodness of their hearts they started allowing employees to keep their children on their plans.

    Also, they keep pointing out as our insurance keeps getting crappier “Of course, this does not apply to those of you on union contracts” which I think they intend to mean “Union thugs are keeping all the good healthcare for themselves!” but sure sounds to me like “This only applies to you poor sods who don’t have the ability to negotiate your compensation.”

  5. 5
    japa21 says:

    There have been a couple ways in which narrow networks have proliferated, well before the ACA.

    As you point out, Richard, there have been just straight narrow networks where everything outside the network is considered out-of-network for benefit determination. The early HMO’s were narrow networks primarily because so many providers refused to participate. And in those cases, there were no out-of-network benefits.

    Two other de4velopments over the years also produced hybred narrow networks. EPO’s have been around a while. In this case there are actually two levels of in-network benefits. There is a narrow network which pays the highest and has its own decutible. Then, there is a broader network, which has its own deductible and benefits payout. And finally there is totally out of network.

    Prior to my wife’s retirement we got our insurance through her employer, a large hospital/health system. If you saw a provider in their system, benefits were paid at one level. Outside the system but still in the insurance company’s network, another level. Outside of that a much lower level.

    ACO’s have also started to be their own form of narrow network.

    So yes, narrow networks have been around for a long time.

  6. 6
    Stella B. says:

    I live in southern California. I can only vaguely remember not having narrow networks — maybe 20 years ago? I know that I don’t live in Sarah Palin’s “real” America, but we aren’t quite the thinly populated backwater that the GOP thinks we are.

Comments are closed.