Obamacare Consumers Lean Toward Price Over Doctor Choice

Consumers shopping on the Obamacare exchanges are thriftier than the general public, with more picking health plans based on price rather than their choice of doctors, a study found.

While the general public prefers more expensive plans that cover a broader range of doctors and hospitals, 54 percent of those who are uninsured or who buy their own coverage select plans that cost less, even if they have less say in providers, the Kaiser Family Foundation found in a poll released today. Only 35 percent of that group -- the target audience of the exchanges set up by the Patient Protection and Affordable Care Act -- would pick a more expensive, broad-network plan.

“The individual market has always been more sensitive to costs,” Dan Mendelson, chief executive officer of the Washington-based consultant Avalere Health, said in a telephone interview. “They’re not used to relying on their employer to take care of them, they generally have less predictable income and they are more accustomed to paying out of pocket.”

As millions of Americans join health plans created through the Affordable Care Act known as Obamacare, consumers, insurers and providers are paying attention to the balance between cost and coverage. Insurers say “narrow network” plans, which limit the number of doctors and hospitals covered, help to keep premiums low, while providers left out of the networks are worried about lost patient volume.

Narrow Networks

Narrow network plans have proliferated on the public insurance marketplaces to cater to the preferences of Obamacare consumers. The government yesterday said 4 million people have now enrolled in private insurance plans for 2014 through the exchanges. Enrollment ends March 31.

About 70 percent of plans on the public exchanges are “narrow” or “ultra-narrow” plans, according to a December study by consulting firm McKinsey & Co. The study also found that incumbent companies were offering three times as many narrow plans as they did prior to Obamacare.

The narrow plans have also caught the attention of small employers and will soon become a staple of the industry outside of the public exchanges, Mendelson said.

“They really do move the needle,” he said. “When a small employer looks over at the rates quoted on the exchanges, they’re interested.”

A majority of small businesses would select a plan with a narrow network if they could save five percent of the costs, according to an October study of small businesses, published in health policy journal Health Affairs.

Expanded Coverage

Next year, insurers may be required to expand the number of doctors and hospitals included in their plans, increasing their coverage to 30 percent of “essential community providers” from 20 percent this year, the Health and Human Services Department said this month. The insurance industry argues this requirement may lead to a rise in premium prices.

“It is important to ensure patients can continue to benefit from the high-value provider networks health plans have established, which are helping to improve quality and mitigate cost increases for consumers as the new health care reforms are taking effect,” Clare Krusing, spokeswoman for the America’s Health Insurance Plans, the industry’s Washington-based lobbying group, said in a telephone interview.

To contact the reporter on this story: Caroline Chen in New York at cchen509@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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