Report: Insurers Narrow Coverage Networks to Keep Obamacare Costs Down

Thursday, 06 Feb 2014 02:01 PM

By Sandy Fitzgerald

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Insurance plans purchased through Obamacare exchanges cost an average of 20 percent less than plans bought through employer-sponsored coverage, according to a new report, because, in part, insurers in the exchanges keep their prices lower by narrowing their coverage networks.

A report from the Health Research Institute at PricewaterhouseCoopers revealed the lower-priced plans, according to The National Journal.

The report says the lowest-price plan this year on the exchanges has a 20 percent lower premium than a comparable employer-sponsored plan.

To come up with the amounts, researchers calculated the total costs of employer-sponsored coverage, and then weighed the costs against the average costs of gold and platinum level plans on the healthcare exchanges, before subsidies.

The difference in costs could affect whether small companies with fewer than 50 employees decide to cover health costs.

If they decide not to offer coverage, that leaves their employees to obtain plans on the Obamacare exchanges, where federal subsidies would help pay some of the costs. But if the small businesses offer coverage, their employees are not eligible for federal subsidies that could lead to a less expensive choice through the Obamacare exchanges.

Researchers said premium prices are the most important factor in a consumer's decision on what insurance to buy. Last fall, a PricewaterhouseCoopers report revealed that 94 percent of insurers started to contract with fewer doctors and hospitals to cut premium costs.

The narrowed networks, or high-performance health plans, allow companies to increase competition among providers as well.

Health Research Institute Managing Director Ceci Connolly said employer-based insurers are also starting to look at narrowing their networks to lower costs and remain competitive.

"We anticipate that the public and private exchanges are going to continue to foster greater competition and ongoing pressure to provide better value," Connolly said.

"Everyone's going to be able to look at what's out there and available on these exchanges. I think employers will turn around and ask insurers for similar good value, when they compare plan offerings and see if they're getting what they want for their money."

But patients are becoming frustrated at losing services or their family doctors, Connolly said, meaning insurers could change their minds if they start seeing consumers do not want to sacrifice care they want for a lower price.

"I think we're really going to learn a lot about what consumers want now that they really have this opportunity to choose from a lot of different plans," she said. "And ultimately competition coming to healthcare is a good and healthy thing."

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