Can Obamacare Avoid a Consumer Rebellion?

Insurers bet that low premiums would be enough to get customers to stomach narrow networks, but a new poll suggests they may have gotten it wrong.

The Affordable Care Act didn't create the tradeoff between insurance premiums and coverage networks, but that doesn't mean consumers aren't furious about it.
National Journal
Sam Baker
Feb. 26, 2014, 12:05 a.m.

When Obama­care handed in­sur­ance com­pan­ies mil­lions of com­puls­ory cus­tom­ers, it also handed them a re­mind­er of one of their in­dustry’s toughest real­it­ies: Con­sumers want low premi­ums, and they want to see any doc­tor they want. And it’s im­possible to give them both.

Gen­er­ally, in­surers selling plans on Obama­care’s ex­changes op­ted to keep premi­ums low, hop­ing the pub­lic would prefer a low up­front price tag — even if that meant cus­tom­ers couldn’t al­ways pick their first-choice doc­tor.

But “if you like your doc­tor, you can hope she’s in our net­work” was al­ways go­ing to be a tough sell for in­surers. With the in­sur­ance mar­ket now viewed through the dis­tor­ted lens of the end­less par­tis­an fight over Obama­care, it’s go­ing to be harder than ever. Re­pub­lic­ans have pounced on the nar­row net­works, cit­ing them as fur­ther proof that Pres­id­ent Obama lied when he said the Af­ford­able Care Act would not cost people their doc­tors.

And as the volume of en­rollees and rhet­or­ic rises, in­surers are wor­ried about a pos­sible back­lash. Nar­row net­works are get­ting a bad repu­ta­tion, and con­sumers may de­mand more choices.

It has happened be­fore: In the 1990s, in­surers hoped that by us­ing health-main­ten­ance or­gan­iz­a­tions to move their cov­er­age away from ex­pens­ive doc­tors and hos­pit­als, they could con­trol health costs while cre­at­ing an in­cent­ive for pro­viders to lower their prices. What they cre­ated in­stead was a pop­u­lar re­bel­lion, with cus­tom­ers balk­ing at the HMO plans and com­plain­ing loudly to Con­gress about it.

Some ana­lysts see a sim­il­ar cli­mate brew­ing now.

“People don’t like to hear ‘no,’ and this is say­ing ‘no,’ ” said Aus­tin Frakt, a health policy eco­nom­ist at Bo­ston Uni­versity.

That’s clear from the Kais­er Fam­ily Found­a­tion’s latest track­ing poll on the health care law. Among those the found­a­tion sur­veyed, 51 per­cent said they’d prefer a broad­er net­work and high­er premi­ums, com­pared with just 37 per­cent who pre­ferred “a more lim­ited range of doc­tors and hos­pit­als” in ex­change for lower premi­ums. And most of the 37 per­cent changed their minds once they were re­minded that a plan with “a more lim­ited range of doc­tors and hos­pit­als” might mean the same thing as “you would not be able to vis­it the doc­tors and hos­pit­als you usu­ally use.”

The ad­min­is­tra­tion is in a tough spot on net­work size. Re­pub­lic­ans have laid the whole is­sue at Obama­care’s feet, even though it’s a mar­ket dy­nam­ic that Obama­care really didn’t cause: It’s a busi­ness bal­ance between price and qual­ity that ex­is­ted long be­fore the law was cre­ated.

But this mar­ket dy­nam­ic nev­er­the­less ex­ists with­in Obama­care policies, and the ad­min­is­tra­tion clearly wants to ad­dress a po­ten­tially un­pop­u­lar part of people’s cov­er­age — without mak­ing that cov­er­age more ex­pens­ive, and thus ac­cess­ible to few­er people.

“The ad­min­is­tra­tion has shouldered the blame for things that are so vastly bey­ond its con­trol, and has at­temp­ted vali­antly to work these prob­lems out,” said Sara Rosen­baum, a pro­fess­or of health care policy at George Wash­ing­ton Uni­versity.

Re­pub­lic­ans have played up nar­row net­works in their cri­ti­cism of the law, ar­guing that the pre­val­ence of nar­row pro­vider net­works in­val­id­ates Obama’s prom­ise that “if you like your doc­tor, you can keep your doc­tor.” But that as­sumes you had a doc­tor to lose in the first place, and many of the people sign­ing up for Obama­care didn’t. Ac­cord­ing to New York state’s ex­change, about 70 per­cent of people who have picked a plan in the state were pre­vi­ously un­in­sured.

That’s part of the reas­on in­surers are still bet­ting that nar­row net­works can gain trac­tion.

In the latest Kais­er Fam­ily Found­a­tion poll, 54 per­cent of the people most likely to be shop­ping for in­sur­ance through the Af­ford­able Care Act’s ex­changes — those who are un­in­sured or who buy in­sur­ance on their own — said they’d rather have a low premi­um than a wide net­work of pro­viders. Just 35 per­cent of the like­li­est Obama­care cus­tom­ers said they would prefer a more ex­pens­ive plan with a broad­er pro­vider net­work.

And there are some sub­stant­ive dif­fer­ences between the HMOs of the ‘90s and the nar­row net­works of today. For starters, HMOs made it dif­fi­cult to see spe­cial­ists, at­tempt­ing to ce­ment care around cheap­er primary-care doc­tors. The ACA in­cludes new tools de­signed to bet­ter co­ordin­ate care among hos­pit­als, doc­tors, and spe­cial­ists. It also re­quires plans to cov­er cer­tain ser­vices that HMOs were able to lim­it.

Still, it’s largely up to the states to de­term­ine wheth­er an in­sur­ance plan’s net­work is ad­equate enough to ac­tu­ally make those be­ne­fits ac­cess­ible. And the Obama ad­min­is­tra­tion is at least send­ing a sig­nal that nar­row net­works are on its radar, if not dir­ectly do­ing any­thing — yet — to for­cibly broaden them.

The Cen­ters for Medi­care and Medi­caid Ser­vices re­cently re­leased new guid­ance for in­surers about their net­works. Its most tan­gible change was to boost the num­ber of “es­sen­tial com­munity pro­viders” a plan must in­clude, from 20 per­cent to 30 per­cent. But the rule also hin­ted at closer scru­tiny of plans’ over­all net­works — without spelling out spe­cif­ic changes that would up­set the bal­ance plans have struck between ac­cess and cost.

The guid­ance says CMS will more thor­oughly re­view net­works to make sure they’re “ad­equate,” rather than simply tak­ing plans’ word for it. And what con­sti­tutes “ad­equate”? CMS won’t say, and out­side ob­serv­ers don’t know.

“We don’t know what that stand­ard is,” Rosen­baum said. “I have no idea what that stand­ard is “¦ this is like oth­er­worldly, this thing.”

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