Many health plans in the Obamacare health insurance exchanges aim to keep premiums down by limiting patients to a select group of providers (e.g., hospitals, physicians). The thought is, by limiting patients to a “narrow network” of providers, patients are in essence restricted to see the most efficient providers. Some may claim that “efficient” means high quality and low cost; others may claim that health plans focuses on cost and largely ignores quality. One research question is, how much do narrow networks save on premiums.
A study by Polsky, Cidav, Swanson (2016) find the following:
We found that within a market, for plans of otherwise equivalent design and controlling for issuer-specific pricing strategy, a plan with an extra-small network had a monthly premium that was 6.7 percent less expensive than that of a plan with a large network. Because narrow networks remain an important strategy available to insurance companies to offer lower-cost plans on health insurance Marketplaces, the success of health insurance coverage expansions may be tied to the successful implementation of narrow networks.
While the final statement may be an overstatement, it appears that Obamacare participants can expect lower cost of health insurance, but also fewer provider choices.