Individual marketplace health plans with narrow hospital and physician networks offered premiums 16 percent less expensive than plans with broad networks, according to a recent study published in Health Affairs.
Researchers — led by Leemore Dafny, PhD, a professor of business administration at Boston-based Harvard Business School — examined Robert Wood Johnson Foundation HIX Compare data on silver-tier health plans on the individual marketplace. The 2014 and 2015 data comprised eight states: California, Colorado, Florida, Michigan, New Jersey, New York, Texas and Washington.
The study authors also gathered data from insurers' websites, including names and addresses of all in-network acute care hospitals for each plan within the study period. Researchers then matched hospitals and discharge data sets for each state in the study.
The study estimates an increase in hospital network breadth from narrow to broad was linked with a premium increase of 5.7 percent in the study period. This equates to $191 per year for a 27-year-old person in 2014, the researchers estimate. Similarly, an increase in physician network breadth from small to broad was associated with a premium increase of 9.4 percent in the study period, or about $316 annually.
Expanding both hospital and physician network breadth was linked to a 15.7 percent premium increase, or $527 per year, the study found.
In addition, if all plans offered broader provider networks, researchers estimate average second-lowest-price silver plan premiums would increase 10.8 percent annually, or $330. Researchers projected narrow networks decreased premium subsidies by about $2.4 billion in 2014, the report states.
Researchers said factors limiting the study include a sample representing about 43 percent of the U.S. population, descriptive rather than causal statistics and the relative newness of the marketplace products.