Narrow Network Plans Give Consumers More Choices in Health Plans

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According to a recent report done by the McKinsey Center for U.S. Health System Reform, 48% of the health plans offered on the insurance exchanges created under the Affordable Care Act are narrow network plans. McKinsey has defined narrow networks as plans in which 31% to 70% of hospitals in the rating area are participating.

This is in comparison to broad networks, which have more than 70% of hospitals participating. The increasing frequency in which narrow networks are popping up gives the consumer a greater range to choose from in regards to value propositions and prices among health insurance plans. However, if a consumer purchases a narrowed network product, then the choice of providers is reduced at the point of access.

Narrow networks are not a new concept for the insurance industry. However, they returned to the spotlight when UnitedHealthcare removed thousands of physicians from its Medicare Advantage network in the fall of 2013. According to payers, narrow networks are a necessary cost control measure. So far, this has been an effective method. The McKinsey report states that broad network plans on the exchanges have median premiums that cost 13% to 17% more than narrow network plans.

Unfortunately, there are many consumers on the federal exchanges that are unaware of the type of plan they have purchased. In April, McKinsey conducted a survey that found that 42% of ACA plan enrollees knew their network type and 26% were unaware. 40% said that they would like more information on the providers included in the different exchange plans.

Author: Lauren Daniels