Monday, September 16, 2013

Fwd: qotd: Exchange plans have sharply limited networks

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-------- Original Message --------
Subject: qotd: Exchange plans have sharply limited networks
Date: Mon, 16 Sep 2013 11:44:44 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Los Angeles Times
September 14, 2013
Insurers limiting doctors, hospitals in health insurance market
By Chad Terhune

The doctor can't see you now.

To hold down premiums, major insurers in California have sharply limited
the number of doctors and hospitals available to patients in the state's
new health insurance market opening Oct. 1.

New data reveal the extent of those cuts in California, a crucial test
bed for the federal healthcare law.

Consumers could see long wait times, a scarcity of specialists and loss
of a longtime doctor.

"These narrow networks won't work because they cut off access for
patients," said Dr. Richard Baker, executive director of the Urban
Health Institute at Charles Drew University of Medicine and Science in
Los Angeles.

To see the challenges awaiting some consumers, consider Woodland
Hills-based insurer Health Net Inc.

Across Southern California the company has the lowest rates, with
monthly premiums as much as $100 cheaper than the closest competitor in
some cases. That will make it a popular choice among some of the 1.4
million Californians expected to purchase coverage in the state exchange
next year.

But Health Net also has the fewest doctors, less than half what some
other companies are offering in Southern California, according to a
Times analysis of insurance data.

In Los Angeles County, for instance, Health Net customers in the state
exchange would be limited to 2,316 primary-care doctors and specialists.
That's less than a third of the doctors Health Net offers to workers on
employer plans.

Other major insurers have pared their list of medical providers too, but
not to Health Net's degree. Statewide, Blue Shield of California says
exchange customers will be restricted to about 50% of its regular
physician network.

"We are nervous about these narrow networks," said Donald Crane, chief
executive of the California Assn. of Physician Groups. "It was all about
price. But at what cost in terms of quality and access? Is this contrary
to the purpose of the Affordable Care Act?"

Insurers and their number of doctors in L.A. County for state health

2,316 Health Net
3,009 Molina
3,855 Anthem Blue Cross
4,946 L.A. Care
5,705 Kaiser
6,559 Blue Shield PPO
8,839 Anthem EPO

28,181 Number of licensed physicians in L.A. County (MBC),0,6433104,full.story

Comment: These new data on use of narrow provider networks in state
insurance exchanges, using Los Angeles County as an example, are
important because they show us the extent to which this concept is being
applied. Narrow provider networks reduce health care spending by
limiting patient access to low cost providers - taking away choice - and
by impairing access though supply-side contractions, that is, rationing
care by limiting the supply of covered health care providers.

Another table accompanying the Los Angeles Times article (available at
the link above) lists premiums for typical policies issued by these
insurers for the benchmark silver plans. When comparing premiums with
the numbers of physicians in the network, there are several interesting
observations. Health Net, with the fewest number of physicians in their
network, has the lowest premiums - no surprise. Blue Shield,
California's nonprofit Blues plan, has premiums on the lower end though
it has a much larger number of physicians than does for-profit Anthem
Blue Cross, yet their premiums are similar. The nonprofit seems to be
more concerned about patient access whereas the for-profit seems to be
concerned more about profits. However, Anthem's EPO (exclusive provider
organization) offers a larger choice in providers but extracts a much
larger premium for that coverage. Comparing Anthem's two products, it
looks like if you want an accessible doctor, you're going to have to pay
for that right. Considering that Kaiser is a closed, integrated health
system, it does have a fairly decent number of physicians, but it also
has the highest premiums. It is likely that Kaiser's premiums are not
high because of the number of physicians, but rather they are high to
prevent destabilization of their business model by allowing too many new
enrollees which might strain their capacity.

Health Net's silver plan premiums are set far enough below the others
such that they will be very attractive for shoppers in the insurance
exchange. The bronze plans have even lower premiums and will also be
attractive. Most shoppers will be relatively healthy and will select
their plans based on the premium - not on the physician networks nor on
the out-of-pocket costs they would face if major health problems were to
develop. Some of these people will become ill or suffer significant
injuries. At that time they will discover that their choices of
providers are too limited, that access may be impaired because the
physicians are too busy or because they are too far away, and that the
out-of-pocket expenses to which they are exposed will cause financial

Leave policy decisions to private insurers and they will always select
policies that will advance their business models as opposed to policies
that would provide optimal access, quality and affordability for
patients. Having cheap premiums is no solution when you can't get a
doctor when you need one, and, when you finally do, you're left broke.

Single payer would have avoided all of this, and it still can.

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