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Insurers Limit Provider Networks To Keep Consumer Premiums Affordable

September 24, 2014

new report details how insurance companies are designing provider networks, often limiting choice of doctors and hospitals, to keep premiums low for cost-conscious consumers looking to buy an individual plan in the health insurance marketplaces. The report, prepared by researchers at Georgetown University’s Health Policy Institute—Center on Health Insurance Reforms and funded by the Robert Wood Johnson Foundation, explores how insurance companies are keeping prices competitive while adhering to the standards set forth by the Affordable Care Act.

Going into the 2014 plan year, insurers offering coverage in the new health insurance marketplaces were no longer allowed to deny coverage based on preexisting conditions or deny coverage for certain services (e.g., maternity care, mental health services, etc.)—two common practices insurers have traditionally used to keep premiums low. Looking to other means to set competitive premium rates, insurers turned to limiting the number of providers covered within plans. The analysis of six states’ insurance markets (Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia) found that while provider networks did not change significantly for small group plans, this was a routine practice in the individual insurance marketplaces. Some raised concerns about patients’ limited access to care, but the states studied have not received complaints from consumers, who by and large were willing to forgo greater access to more providers for lower premiums.

The report also looked at states' responses to consumer and provider concerns about the transparency and adequacy of networks, and the likelihood of state efforts to strengthen requirements for participating insurers. The report found that states are unlikely to make dramatic changes to network adequacy standards, at least in the short term.

“Insurance companies calculated that consumers would be willing to trade greater provider access for lower premiums, and to a large extent, our research confirms that," said Sabrina Corlette from Georgetown University’s Health Policy Institute, and the report’s lead author. "As networks have narrowed, states are showing a mixed response to consumer and provider concerns about transparency and adequacy."

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