Provider networks and health plan premium variation

Area of Science:

• Health Economics
• Health Services Research
• Insurance Market Analysis

Background:

• Understanding factors influencing health insurance premiums is crucial for consumers and policymakers.
• The Affordable Care Act (ACA) Health Insurance Marketplaces offer various plans with different network structures.
• Previous research has explored network design but comprehensive analysis linking breadth and quality to premiums is needed.

Purpose of the Study:

• To investigate the relationship between plan premiums and the breadth (physician and hospital) and quality of provider networks.
• To quantify the impact of network breadth and quality on insurance plan costs within the ACA Marketplaces.

Main Methods:

• Analysis of 2016 data from the Robert Wood Johnson Foundation HIX Compare, Vericred, CMS Hospital Compare, and AHA survey.
• Utilized ordinary least squares regressions with state-rating area and carrier fixed effects.
• Examined associations between plan premiums and physician network breadth, hospital network breadth, and hospital network quality.

Main Results:

• A one standard deviation increase in physician network breadth correlated with a 2.8% ($101/year) premium increase.
• A one standard deviation increase in hospital network breadth correlated with a 2.4% ($86/year) premium increase.
• No statistically significant association was found between plan premiums and hospital network quality (e.g., star ratings, teaching hospital status).

Conclusions:

• Both physician and hospital network breadth positively contribute to health insurance plan premiums.
• The impact of network breadth on premiums is substantial and quantitatively similar for both physician and hospital networks.
• Health insurance plan premiums in the ACA Marketplaces appear to be insensitive to the quality of hospital networks.