The Skinny On Narrow Networks

Philip Klein complains about the narrow healthcare networks of many Obamacare plans:

Insurers throughout the country offering coverage through the new health insurance exchanges drove a hard bargain with medical providers, and thus many of those providers chose not to participate. The end result was that Americans who obtained coverage through the healthcare law often found that they didn’t have much choice when it came to doctors or hospitals. Those who averted “rate shock,” in other words, often found themselves exposed to “access shock.”

Lawmakers and regulators have been taking measures to try to address the problem going into the 2015 benefit year, but it is not clear whether the moves will actually improve the consumer experience.

But how much harm do narrow networks really do? A new working paper by Jonathan Gruber and Robin McKnight tries to answer that question. Jonathan Cohn is encouraged by their findings:

People who switched to narrow network plans saved both themselves and their employers huge amounts of money: Spending on medical bills declined by approximately one-third, according to the paper. Partly this was because people were getting care only from providers that charged less, Gruber and McKnight found, and partly that was because they were seeing fewer specialists.

That wasn’t necessarily good news: In theory, it could have meant that these people were getting worse medical care. But Gruber and McKnight detected no evidence of that. The hospitals in the narrow networks performed just as well on typical measures of quality. And while people were using fewer specialty services, Gruber and McKinght write, these people were also spending more time with their their general practitioners and family doctors—and less time in the emergency room. That’s exactly the kind of transformation many experts say is necessary.

Kliff fully admits that cutting “patient spending by one-third is no small feat for a health insurance plan.” But she isn’t confident “that every foray into limited choice will go equally as well”:

Its probably most fair to read this study as a proof of concept: set up correctly, limited choice plans can save money without sacrificing quality. Whether all plans work this way is something we’ll learn more about, as more people on Obamacare keep enrolling in these products.