NCPA - National Center for Policy Analysis

Are Smaller Insurance Networks the Answer?

April 6, 2011

Thousands of employers in California and across the country are slashing expensive doctors and hospitals from their insurance rosters in a move to hold down rising health care costs -- a trend that is gaining favor with corporate bosses, if not the rank and file, says the Los Angeles Times.

The savings on insurance premiums -- nearly 25 percent in some cases -- are gained when companies switch their health plans to "narrow network" HMOs that offer fewer choices of medical providers.  While many workers welcome the cheaper HMOs, the savings come at the price of fewer health care choices.

The availability of doctors varies by each narrow network.

  • Health Net, one of the first to promote the strategy in California, features 47,000 doctors in its full HMO network but just 7,000 physicians in its Silver plan.
  • That network can save businesses as much as 14 percent on insurance premiums, a spokesman said.
  • An even smaller network, Bronze, has 1,600 doctors in Southern California and can shave as much as 24 percent off insurance bills.

Other insurance companies, seeing a trend in the making, are eagerly promoting their own versions of narrow networks nationwide.  Three of the largest national providers in particular -- WellPoint Inc., Aetna Inc. and UnitedHealth Group Inc. -- are quickly expanding the niche to capture millions of new customers, says the Times.

Source: Duke Helfand, "A Shift toward Smaller Health Insurance Networks," Los Angeles Times, April 3, 2011.

For text:,0,964650.story


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