Narrow Medical Provider Networks: Welfare Implications and Approaches to Market Design∗
نویسندگان
چکیده
We consider the consequences of narrow medical provider networks—offered by insurers on health care exchanges and employer-sponsored insurance markets—for inequality and welfare. We first describe current and proposed approaches to network regulation and propose a model of the health care market that can be used to evaluate the likely effects of these and other market design policies. The model, based on Ho and Lee (forthcoming), accounts for consumer demand for hospitals, household demand for insurers, and bargaining between insurers and employers over premiums and between insurers and hospitals over prices. We show that in this framework, an insurer will exclude a hospital from its network if the incremental revenue from including it (generated by increased premiums and enrollment) is outweighed by an increase in the insurer’s reimbursement payments to hospitals. However, excluding a hospital may be inefficient if the benefit to consumers from the hospital’s services exceeds its incremental cost relative to other hospitals in the insurer’s network. This divergence between insurers’ incentives and social preferences—potentially exacerbated by frictions in the health care market generated by limited patient cost-sharing and premium setting constraints—may lead to inefficiently narrow networks. We argue that a flexible approach to regulatory intervention is warranted. In particular, restrictive policies such as must-carry requirements substantially reduce insurers’ bargaining leverage from being able to exclude a provider and are likely to generate cost increases that may far outweigh their benefit to consumers. We close by proposing a research agenda that uses economic models to assess the impact of various network, reimbursement, and premium regulations.
منابع مشابه
The effect of narrow provider networks on health care use.
Network design is an often overlooked aspect of health insurance contracts. Recent policy factors have resulted in narrower provider networks. We provide plausibly causal evidence on the effect of narrow network plans offered by a large national health insurance carrier in a major metropolitan market. Our econometric design exploits the fact that some firms offer a narrow network plan to their ...
متن کاملNarrow Provider Networks for Employer Plans.
The authors conducted in-depth qualitative research to examine questions around provider networks in employer health plans, particularly the development of so-called “narrow networks,” which have grown in the individual market exchanges under the Patient Protection and Affordable Care Act of 2010 (ACA). These narrow networks are characterized by offering considerably fewer health providers than...
متن کاملA leader–followers model of transmission augmentation for considering strategic behaviours of generating companies in energy markets
This paper suggests an integrated mathematical framework developed based on the leader–followers game for augmentation of transmission networks. Transmission Network Service Provider moves first and designs the horizon year transmission system. Generating Companies compete for having the highest share from the energy market and they find their equilibrium point using the Nash equilibrium concep...
متن کاملPRODUCT DEVELOPMENT IN PRODUCTION – NETWORKS
This paper presents an overview of new approaches in rapid product development in production networks from design points of view. The manufacturing industries are changing their focus to global sourcing as a means to improve performance and enhance competitiveness. Some partnerships created with this strategy improve product development through collaborative design. With the advent of e-Commerc...
متن کاملExploring the decline of narrow networks on the 2017 ACA marketplaces.
The prevalence of narrow provider networks on the ACA Marketplace is trending down. In 2017, 21% of plans had narrow networks, down from 25% in 2016. The largest single factor was that 70% of plans from National carriers exited the market and these plans had narrower networks than returning plans. Exits account for more than half of the decline in the prevalence of narrow networks, with the res...
متن کامل