Narrow networks reemerge under ACA exchange plans

About half of the health plans offered on the insurance exchanges created under the Affordable Care Act (ACA) are narrow network plans, according to a recent report released by the McKinsey Center for U.S. Health System Reform.

In its analysis, McKinsey defined narrow networks as plans that have 31% to 70% of hospitals in the rating area participating, in contrast to broad networks, which have more than 70% of hospitals participating.

It found that 48% percent of the plans offered on the ACA exchanges are narrow networks, and those plans make up 60% of the networks in the largest cities in each state.

“The increased prevalence of narrowed networks gives consumers a wider range of value propositions and prices among health insurance plans,” the report says. “But, if a consumer purchases a narrowed network product, then at the point of access, the choice of providers is reduced.”

Narrow networks are not a new concept for the insurance industry, but they returned to the healthcare forefront in November 2013, when UnitedHealthcare dropped thousands of physicians from its Medicare Advantage network.

Payers defend narrow networks as a necessary cost control measure, and McKinsey says so far it’s been effective. Broad network plans on the exchanges have median premiums that cost 13% to 17%  more than narrow network plans, according to the report.

However, not all consumers on the federal exchanges are aware of the type of plan they purchased. McKinsey conducted a consumer survey in April that found 42% of ACA plan enrollees knew their plan’s network type. Twenty-six percent of enrollees said they were unaware of their network type, and 40%  of respondents said they would have liked more information about which providers were included in the different exchange plans.