Ben Rosenthal was treated for prostate cancer four years ago and had gallbladder surgery the year before that. A former manager at a market-research firm in Los Angeles, Rosenthal, 57, paid for his own health insurance. Last fall, when his plan was discontinued because it didn’t meet standards set by the Affordable Care Act, Rosenthal bought the best insurance coverage he could find, a top-tier “platinum” policy from Blue Shield of California that costs $792 a month. He figured it would provide access to top hospitals. Then in February he learned the plan wouldn’t cover the hospitals where he was used to being treated.
Rosenthal is one of millions of Americans who have purchased insurance under the Affordable Care Act and are discovering that many of the new plans offer a narrow network of doctors and facilities. “If I had anything happen, I wouldn’t want to go to a hospital that I’m not familiar with and with doctors I don’t know,” he says.
Since the ACA created marketplaces for private health plans last fall, insurers expecting to lure customers with low premiums have fashioned smaller networks of medical providers. By cutting out expensive hospitals and negotiating favorable rates with doctors in exchange for sending more patients their way, insurers can keep premiums down. Blue Shield’s new network includes 43 hospitals in Los Angeles County, about 64 percent of what its standard coverage offers, spokeswoman Lindy Wagner says in an e-mail.
In addition to having fewer options, buyers are making decisions about which plans to buy based on incomplete or misleading information, says Karen Pollitz, senior fellow at the Kaiser Family Foundation, a health policy research group. “Consumers have a very limited ability to shop in advance and evaluate provider networks,” she says.
Before Obamacare, the market for individual health plans was too small for most insurers to bother creating provider networks separate from those they offer large employers. If you bought a plan on the private market, you had access to the same doctors and hospitals the insurer’s large, employer-based plans offered. That changed as insurance companies created offerings for price-conscious shoppers on healthcare.gov and state exchanges. For insurers, controlling costs has become more important since the ACA barred denying coverage or charging higher rates to people with preexisting conditions. Reducing choices can lower costs by 5 percent to 7 percent, estimates Craig Hasday, chief operating officer at Frenkel Benefits, a New York brokerage. “On the exchanges in many states, the narrow networks are the only networks that are available,” he says.
Many consumers say they don’t mind the limitations. A recent Kaiser Family Foundation poll found that 37 percent of respondents prefer cheaper plans with fewer doctors and hospitals over broader, more expensive coverage. Younger people and those without insurance through employers were more likely to be satisfied with more restrictive plans.
People can have trouble determining if their doctors or hospitals will be covered. Plans on healthcare.gov and state marketplaces are required to include links to directories that show which providers accept the insurance. But the information is often missing, wrong, or difficult to navigate, says Oliver Kharraz, chief operating officer of ZocDoc, an online appointment booking company. ZocDoc tried to verify the accuracy of hundreds of directories by calling doctors listed as in-network providers. About half the listings were wrong, Kharraz says. The California exchange, one of 15 state marketplaces that operate independently of healthcare.gov, created a central directory on its website but took it down on Feb. 6 because of errors.
The White House plans to identify networks that prevent people from receiving timely care, and will ask insurers to add more providers before allowing them to sell in the marketplaces, according to a March 14 letter from the Centers for Medicare and Medicaid Services to insurers.
The insurance industry is resisting federal efforts to review health plans’ lists of doctors and hospitals. Creating a new network can take a year or more, and companies that currently are designing plans for 2015 won’t have time to tinker with them, Dan Durham, executive vice president of America’s Health Insurance Plans, the industry’s lobbying group, wrote in a Feb. 25 letter to the administration.
Pressures on insurers to keep premiums low—state regulators can reject plans that are priced too high—may mean patients will have to learn to live with restricted choices. “The industry’s had to find ways to cut costs,” says Hasday of Frenkel Benefits. The result, he says, is “much less transparent for the consumer.”