Sunday, May 15, 2016

Elisabeth Rosenthal on narrow networks in ACA marketplace: A few "yes buts"

On the front page of today's New York Times Sunday Review, Elisabeth Rosenthal, author of the incomparable Paying Till it Hurts series on the dysfunctions of our price-gouging healthcare system, spotlights the limitations of ACA marketplace plans, starting with narrow networks. It's accurate and fair, acknowledging the good that the law has done. Nonetheless I have some caveats:

1. Rosenthal compares marketplace plans' narrow networks unfavorably with the more robust networks typically offered by employer-sponsored insurance:
Some early studies of the impact of the Affordable Care Act plans are proving patients’ grumbling justified: Compared with the insurance that companies offer their employees, plans provide less coverage away from patients’ home states, require higher patient outlays for medicines and include a more limited number of doctors and hospitals, referred to as a narrow network policy.
Quite so. But the more apples-to-apples comparison would be between marketplace plans and plans available in the pre-ACA individual market -- which for decades has offered insurance inferior to that available from employers.  It's true too that provider networks in pre-ACA plans might often have been less restrictive than in typical marketplace plans -- or at least than in the cheapest marketplace plans, which most enrollees buy. But pre-ACA plans also offered less comprehensive coverage and was either not available or prohibitively expensive for the considerable percentage of the population (estimated by various studies at 20-50%) deemed to have "preexisting conditions."

Employer-sponsored plans are more expensive in absolute terms than marketplace plans. The average single-person employer-sponsored plan cost $6251 in 2015, according to the Kaiser Family Foundation's annual survey, with the employee paying $1071 of that total. The average marketplace plan cost a total of $4752, of which the average enrollee paid $1272 [update, 5/16, with hat tip to Ken Kelly.*

Part of the reason U.S. healthcare costs are so high is because employers don't resist effectively -- they feel they need to include all major providers in their network, which limits their negotiating leverage. "Narrow networks" are a means of cost control in our dysfunctional system in which every insurer must negotiate for itself. They're a very poor substitute for uniform payment rates (whether single payer or all-payer) -- but a necessary one as long as the U.S. lacks the political will  to coordinate rates among different payers.

[Update: it occurs to me too that while marketplace vs. ESI may not be "apples to apples" in one sense, the ACA did aim to erase or least reduce the difference. And meanwhile, networks in many ESI plans are getting more restrictive. Again, the absence of uniform payment rates drives this dysfunction. And conversely, another aim of the ACA was to drive down the price of insurance, which means exerting competitive pressure on insurers to pay less to providers, which means narrow networks.]

2. With respect to drug costs, Rosenthal cites a study by Emory health economist Kenneth Thorpe which "found that out-of-pocket prescription costs were twice as high in a typical silver plan — the most popular choice — as they were in the average employer offering."  That study, as I argued at length in healthinsurance.org is misleading, in that it ignores (or rather buries and summarily discounts) the fact that 80% of marketplace silver plan enrollees access strong Cost Sharing Reduction subsidies and thus cover a higher percentage of drug costs than the average ESI plan. The formularies may be narrower in some cases, but the out-of-pocket costs for covered drugs are lower.

3. While assessing the overall strength of a provider network on the exchanges may be difficult, as Rosenthal asserts, HealthCare.gov, the federal exchange, now makes it quite easy to check whether a particular doctor or hospital is in network. Rosenthal also claims that while new rules require insurers to keep provider information up-to-date, enforcement is lax. I'm sure that's true -- but market pressure at least to maintain adequate networks and information is ratcheting up, and the forthcoming network ratings will help.

4. Rosenthal writes that because of the lack of out-of-state coverage in most marketplace plans, "many parents who were excited that they would be able to keep their children on their policies until age 26 have discovered that this promise has gone unfulfilled."  Again, true but...it's also worth mentioning that the ACA mandates that ESI cover adult children to age 26 -- and that aspect of the provision affects far more people than its limited value in marketplace plans. For those in the marketplace, their adult children needing coverage may do very well buying their own subsidized plans in the ACA marketplace -- or accessing Medicaid through the ACA Medicaid expansion. Most young adults whom parents might want to cover probably earn little enough to get affordable coverage in the marketplace or through Medicaid.

I don't want to be an apologist for the ACA marketplace. I would prefer that the insurance offered to those who lack access to ESI or other public insurance plans look more like a Basic Health Plan (currently offered only by New York and Minnesota), in which the state is the ultimate payer, payment rates are low, and enrollees endure narrow networks in exchange for very low premiums and out-of-pocket costs. And a reasonable inference from Rosenthal's overview is that a functioning Congress could do much to improve the the marketplace created by the ACA -- as Hillary Clinton's proposed reforms would do. I would take that as a given for any reform on the scale of the ACA. The real cause for lament is that we have a bad-faith opposition that blocks the kinds of organic, learn-as-you-go fixes that all healthcare systems require -- at least with respect to the ACA. Outside that toxic political zone, there's a good degree of bipartisan consensus with respect to payment reform (though ironically, as is perhaps the case with many areas of bipartisan agreement, consensus may be in support of flawed premises, e.g., pay for performance).

--

Ken Kelly -- a constant font of accurate information on Twitter -- cites the average cost of an employer-sponsored family plan in 2015, $17,545. I compared individual plan premiums because family plans are relatively in the marketplace, as most enrollees qualify for subsidies, and the children of most subsidy-eligible adults qualify for CHIP.

1 comment:

  1. Fascinating statistic from Ken Kelly that the average ACA plan costs about $400 a month,and the average enrollee pays only $100 a month.
    My agency sells to middle class persons, and I never see subsidies that good.
    When a family comes in for a quote and I come back with $1,100 a month, they shake their head and start investigating the Christian sharing plans. Without employer backing they are just lost.

    ReplyDelete

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