Narrow provider networks limit the number of covered providers included in health insurance plans. These networks do not seem to be quickly appearing among employer-sponsored plans but are more common in state exchanges today. This was a finding in a recent research project conducted by the Employee Benefit Research Institute in cooperation with several other organizations and Wake Forest University.
These narrow networks have increased in numbers among individual exchanges because of the Affordable Care Act’s provisions. They are distinguished by providing fewer providers than those serving groups for price discounts. Since narrow networks are becoming prominent in the health insurance marketplace, they are starting to gain more attention from individuals and research experts. Also, they are becoming somewhat interesting to employers, and researchers said that this new spark of interest may lead to more narrow networks appearing in group health insurance.
The researchers at EBRI performed a literature review to determine what was happening with narrow markets and employer-sponsored health plans. They also interviewed the HR directors of several large companies and conducted some independent research from policy experts in several states. One of the major findings of the study was that renewed interest has not been extremely strong for these networks. In 2016, less than 10 percent of employers offered plans with narrow networks.
Employers rated these networks as minimally effective in comparison with other health insurance cost management strategies. Employers were not very interested in these plans because of concerns about upsetting workers, poor year-over savings and the availability of narrow networks. Until the “Cadillac Tax” is modified or removed, these concerns will likely continue.
One sign that employers may become more receptive to narrow networks is the increase in companies offering an alternative network. More than 30 percent of employers with over 5,000 workers said that they offered a high-performance or similar alternative network. Urban markets are expected to be more likely to adopt narrow networks.
In places where narrow networks are offered, popularity could be enhanced by providing stronger financial incentives to workers who are willing to consider them. One strategy is to offer a fixed contribution amount to workers that remains consistent despite plan choice.
Also, private exchanges can be helpful for giving workers a broader range of health plan choices. However, neither of these strategies are currently used heavily by employers. They do provide some important issues to think about for keeping workers happy and retaining top talent. To learn more, discuss with a UBF consultant today.
Allan Phillips is a Managing Principal at UBF and has over 25 years experience as a senior health care and pension consultant. He has worked with Fortune 50, 500 and mid-size companies to assess, develop, and implement integrated benefits programs for global organizations.