President Obama‘s healthcare law has provided an economic case study on the tradeoffs between cost and access.
Though insurance premiums soared for many Americans in 2014 — especially for young and healthy individuals — because of the regulations imposed by the law, those increases weren’t as high as they could have been. One reason is that insurers responded to the regulations with narrower networks.
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.
California has been ground zero for fights over narrow networks. Early on, controversy erupted in the state when it became clear that Cedars-Sinai Medical Center, one of the nation’s premier hospitals, would not be included in any exchange plans, and UCLA Medical Center, another top facility, would only be included in a few networks.
The backlash against narrow network plans has triggered a wave of consumer lawsuits against insurance companies in California. Regulators are investigating the narrow network problem, and last month the state legislature passed a bill aimed at addressing the issue. But the Los Angeles Times noted that “Anthem and other insurers largely stuck with that narrow-network strategy for 2015 plans in Covered California and outside the exchange.”
New Hampshire regulators have touted progress on this front. For 2014 the state only had one insurance company, Anthem, whose network included just 16 of the state’s 26 acute care hospitals. But in 2015 the state expects to have five insurers participate in the exchanges, and each of the 26 hospitals is expected to be carried by at least two networks.
State regulators have yet to announce final rates for 2015, however, and what could happen is that insurers will offer more access for more money. People who are willing to pay for more expensive insurance will have access to broader networks, but people who seek cheaper plans would be more limited in their choice of doctors.
The Centers for Medicare & Medicaid Services proposed rules for 2015 that would require insurers to submit a list of providers, which CMS would evaluate to make sure consumers are offered “reasonable access.” CMS also identified “essential community providers” that offer medical care predominantly to low-income individuals. In 2014, participating plans were required to include 20 percent of those providers in their networks. The new rules would boost that to 30 percent in 2015. But these moves are mostly symbolic. The problem is, if the administration pushes too hard on access, it would inevitably lead to higher premiums — and the White House is eager to avoid such headlines heading into midterm elections.