Lots of people shopping in the new health care marketplaces this year picked health plans that limited their choice of doctors and hospitals. The plans were popular because they tended to cost less than more conventional plans that covered nearly every health care provider in a region.
The proliferation of these more limited plans, called narrow networks, has worried consumer advocates and insurance regulators. The concern is that people will struggle to find the care they need if their choices are limited.
Maybe we don’t have to worry so much. A new study suggests that, done right, a narrow network can succeed in saving money and helping certain patients get appropriate health care. The study, published as a working paper with the National Bureau of Economic Research, looked at a program that used financial incentives to steer workers into narrow plans. Those that chose the plans saved their employer money, saw their primary care doctors more and used the emergency room less. That doesn’t mean that narrow networks are the right choice for every health care consumer, but it all sounds like good news for the type of patient who wants such a plan. Done right, a smaller choice of doctors may have some advantages.
What’s encouraging about the program, studied by the economists Jonathan Gruber of M.I.T. and Robin McKnight of Wellesley College, is that its conditions look similar to what we’re seeing in the marketplaces. Massachusetts offered its workers a discount — three months premium-free — if they chose a narrow network plan over a standard offering. Only about 10 percent of the workers took the state up on the offer. Over the course of a year, that group’s health care cost its employer 36 percent less than it cost to cover their colleagues in the traditional plans. Over all, that translated to a 4.2 percent decrease in spending for the whole program.
The savings, researchers found, came because the plans covered doctors and hospitals that charged less than their competition. But they also came because the patients who chose the narrow networks tended to use fewer expensive health care services. Over the course of the year, they tended to see their primary care doctor more and use the emergency room less than other patients. Those results were “the opposite of what you would have expected,” Mr. Gruber said, if the plans were achieving their savings by making it difficult for people to get needed care. Instead, the results seem to suggest that the narrow network did a good job taking care of its patients.
The people who chose to buy the cheaper plans were a little healthier than the rest of the state employee population, the researchers found, but not substantially so. The results suggest an actual difference in the way the workers in the plans were using the health care system.
The study doesn’t say that switching everyone to a narrow plan would result in savings and satisfied customers, but it does suggest that the plans can be a good option for the type of customers who know what they’re buying and are willing to trade away choice for lower premiums.
Of course, there are lots of different kinds of health plans that are called narrow, and not all of them may be as good as the one offered to the Massachusetts workers. The best narrow plans would avoid high-cost, low-quality providers, while still offering customers the services they need. A bad one, theoretically, could save a lot of money by making it hard for patients to get the doctors and services they need, or by using only the low-cost, low-quality providers.
This year, about 48 percent of marketplace plans in the most popular category could be classified as narrow, according to a study from the consulting firm McKinsey and Company, meaning they covered fewer than 70 percent of providers in a given area. There wasn’t too much oversight over the “adequacy” of marketplace networks, but regulators are tightening up the rules for next year.
It’s also not clear that all those who bought a narrow plan this year understood what they were buying. Health literacy among this year’s newly insured is pretty low. And the marketplaces were not very transparent about what sorts of networks various plans included. The study also found that the patients with the most significant savings were those who were able to keep an existing primary care doctor, meaning a change to a brand-new narrow network may not be as good as a narrow network that includes some doctors you already know.
It’s also unclear whether the savings will stay as impressive as time wears on. The study followed the Massachusetts workers for only a year. Research on health plans with high deductibles and health savings accounts also found big savings in Year 1, but long-term research showed that the gap between those plans and traditional ones narrowed over time, as patients got savvier about using them.
Mr. Gruber says this study should not be the final word on narrow networks, but he said he hoped it would change the tenor of the debate about them. Instead of automatically seeing a narrow network as a sinister plan feature, he said, he hopes market watchers will now see them as a tool that can, in some cases, help save money without hurting patients.
“Nobody is talking about forcing people into these plans,” he said. “We’re talking about offering people a choice with price incentives.”