Today's front-page story by Timothy Martin on the prevalence of "narrow networks" in plans offered on the ACA exchanges certainly emphasizes the negative -- without adequate context, in my view.
First, consider the broader context. News this weekend was full of "ACA signup surge" headlines: 1.1 million people have enrolled in plans via HealthCare.gov, and about 2 million overall have enrolled in ACA plans when state exchange totals (not yet fully tallied for the pre-Christmas surge) are added in. That's well off original projections but signals a significant recovery and acceleration. Today's front-page Journal story is the first since these numbers came in, and mentions them only in passing.
Fair enough, perhaps. The story is about "narrow networks" -- ACA plans that exclude access to many doctors and hospitals within the coverage area. The narrative is built on a McKinsey study finding that 70% of silver plans offered on the ACA exchanges are "narrow" or "ultranarrow" as defined by the study: offering access to fewer than 14 hospitals.
This is a serious problem, bespeaking a tough tradeoff. Imagine needing open-heart or cancer surgery and not having access to the best specialists. I know that my family is not wired to accept limitations like that.
On the other hand, anyone who's read Steven Brill's massive exposé of hospital and doctor price-gouging (paywalled; Brill followup here), or Elizabeth Rosenthal's multi-part New York Times series (3, 2, 1) on the same, or Ezra Klein's comparative charts of procedure prices in the U.S. compared to everywhere else, knows that hospitals and other healthcare providers have outsized pricing power in the U.S. Twenty years of consolidation of hospital systems and physician practices (accelerated by the ACA) have increased this power -- a product of our fragmented payment system. In every other wealthy country, the government effectively controls healthcare procedure pricing, whether or not payments are filtered through private insurers.
In the U.S., it's divide and conquer. Medicaid and Medicare exert some downward pressure on prices, but private insurers pay more, and they lack the leverage to push down provider prices in consolidated markets. And uninsured patients have no leverage. This fragmentation is why we have $3,000 tabs for six stitches in the E.R. room, hip replacements that cost $100,000 vs. $13,000 in Belgium, $150 Tylenol doses, etc. Narrow networks, like the HMOs of the nineties, are an attempt to push back. The ACA has triggered a tug-of-war, or rather intensified a perpetual one: providers rush to consolidate, insurers struggle to impose some price discipline.
Jonathan Cohn recently offered a balanced picture of the tradeoffs involved in cutting high-priced hospitals out of insurance networks (the story, "The Patient Problem," doesn't seem to be online yet. UPDATE 1/7/14: it's up!). He focused in large part of Cedars-Sinai Medical Center in Los Angeles, dubbed "the medical world's most glam facility" by Hollywood Reporter, which the largest insurers in California cut out of their ACA plans. Cedars-Sinai was the focal point of an angry WSJ op-ed written by an LA psychotherapist whose existing plan, bought on the individual market, included coverage there, and who will lose access if she buys one of her current insurer's plans on offer on the California ACA exchange. Cohn acknowledges that those who lose access to Cedars-Sinai and other high-status hospitals may lose access to the best care for some procedures. But he cites an array of hospital quality ratings and studies to show that the picture is mixed:
Ratings from HealthGrades, a Denver-based company that uses government data and other information to judge hospitals around the country, offers a similarly mixed picture. Cedars is "better than average" at preventing death following a serious complication from surgery, for example, but "worse than average" at letting patients get bed sores and bloodstream infections from catheters. Cedars's performance was strong enough that HealthGrades recognized it for "clinical excellence," suggesting that the hospital is among the top 5 percent nationally. But at least three other local hospitals did better than that. All of them made HealthGrades's list of the 100 best hospitals in the country. "Reputation doesn't necessarily mean quality," says Glenn Melnick, a health economist at the University of Southern California (USC).
Moreover, insurers had good reason to bypass Cedars:
Still, Cedars isn't just more expensive than the community hospitals that deal primarily with more routine cases. Based on available information, it appears to be more expensive than other hospitals that handle transplants and complex procedures with good outcomes, such as St. Vincent's or teaching hospitals like UCLA and USC [the WSJ cites a patient whose plan also doesn't include UCLA]. The official "sticker price" for services at Cedars is among the highest in the entire country, according to federal data. Those prices don't correspond to what insurers pay: Cedars, like all hospitals, negotiates discounts with each insurer. But many experts agree that Cedars ends up commanding unusually high fees because its reputation gives it more bargaining power. (They note, too, that Cedars has been running unusually high operating margins.) As long as some of these other teaching hospitals remain available to Anthem and Blue Shield subscribers, says Gerald Kominski, director of the Center for Health Policy Research at UCLA, "the fact that Cedars is not in these networks--I don't see that as a serious problem per se."The WSJ's Martin does not provide this kind of context. Here's all he gives us about the market dynamics:
The health maintenance organizations of the 1990s, which were widely credited with holding down health costs then, encountered a broad consumer backlash over their restrictions on what doctors or facilities customers could use. But insurers say they believe things will be different this time because consumers care more about price than the range of doctors and facilities they can use.Worse, Martin's story is centered on anecdotal evidence of a dubiously significant trend: patients rushing to schedule procedures before Jan. 1, when their old plans expire and ACA-compliant plans take over:
Some 70% of new plans under the health law offer relatively narrow networks compared with many current plans, according to a recent McKinsey & Co. report."For exchange plans, it's about affordability and getting to a lower price point," said Juan Davila, an executive vice president at Blue Shield of California, which dropped about 40% of its physicians who didn't agree to lower rates for the new plans.
The recognition by some consumers that their new plans won't always cover the facilities or doctors they want is triggering the boomlet in last-minute procedures, say health-care providers.Reading this, you'd never know that the only potentially affected individuals are the 5% of Americans insured through the individual market, many of whom will have reduced premiums and out-of-pocket costs through the ACA, and only some of whom will experience a narrowing of network. Note, too, that hospital claiming 'thousands" of calls is Cedar-Sinai, the poster child of high-priced, plan-excluded hospitals, located in a Mecca for prosperous self-employed professionals.
UT Southwestern Medical Center in Dallas has seen requests for complicated imaging tests and colonoscopies rise in recent weeks, said Bruce Meyer, an executive vice president. Barnes-Jewish Hospital in St. Louis has seen "dozens" of patients push up elective orthopedic surgeries, a spokeswoman said. Cedars-Sinai Health System, a top teaching hospital excluded from most exchange plans in the Los Angeles market, said it has fielded thousands of calls from people concerned about losing access and wanting to schedule elective procedures before Dec. 31.
The focus on colonoscopies -- elaborated below -- calls for a different kind of contextualization:
Some specialist groups also are seeing higher-than-normal volume this month. Illinois Gastroenterology Group, a team of 40 physicians, has seen "hundreds" of accelerated requests for colonoscopies in December due to concerns over access and higher deductibles in 2014, said Lawrence Kosinski, a managing partner.Under the ACA, colonoscopies are a mandatory free benefit for people over 50. It's true that there are some ambiguities to the benefit: some insurers have not covered the polyp removal that's often done during or shortly after the colonoscopy -- a loophole that should be removed. But you'd think that an article spotlighting an alleged colonoscopy rush to evade ACA-triggered changes would mention that the procedure is in most cases free and will remain free.
One more bit of context regarding colonoscopies: they are a hotbed of price-gouging, as Elizabeth Rosenthal documented:
in Keene, N.H., Matt Meyer’s colonoscopy was billed at $7,563.56. Maggie Christ of Chappaqua, N.Y., received $9,142.84 in bills for the procedure. In Durham, N.C., the charges for Curtiss Devereux came to $19,438, which included a polyp removal. While their insurers negotiated down the price, the final tab for each test was more than $3,500..Bending our healthcare cost curve is going to hurt -- or in some cases, seem to hurt while benefiting those forced to think twice about an elective procedure, or to choose a more cost-effective procedure or cheaper provider. Sometimes some of us will be flat-out losers. But meaningful price pressure on America's healthcare providers is an essential element -- probably the essential element -- in effective healthcare reform. Timothy Martin might have acknowledged that.
In many other developed countries, a basic colonoscopy costs just a few hundred dollars and certainly well under $1,000. That chasm in price helps explain why the United States is far and away the world leader in medical spending, even though numerous studies have concluded that Americans do not get better care.
Largely an office procedure when widespread screening was first recommended, colonoscopies have moved into surgery centers — which were created as a step down from costly hospital care but are now often a lucrative step up from doctors’ examining rooms — where they are billed like a quasi operation. They are often prescribed and performed more frequently than medical guidelines recommend.
UPDATE 1/6/14: Merrill Goozner adds some important perspective on the end-of-year rush to schedule medical procedures:
...one story that appeared in the nation's leading financial paper...reported how patients were racing to cram in last-minute tests and procedures “before the health law starts.” The story blamed the phenomenon on the rise of narrow networks, never once stopping to analyze how much of the phenomenon—hard to measure under the best of circumstances—could actually be tied to people who lost their old plans and obtained new ones with restricted networks.
The story caught my eye because over the course of my reporting career, I wrote several end-of-the-year stories on the rush to get procedures and tests done. Of course, before Obamacare came along, analysts and economists tied the phenomenon to “use it or lose it” health savings accounts. That factor was never noted in this year's story.
The WSJ on the ACA:
WSJ hits ACA from the left
On rate shock in Georgia
The WSJ spotlights an apparent anomaly in ACA subsidies
The WSJ on the ACA, cont.
The WSJ leans into "rate shock" narrative for the ACA