Health Trade

Traditionally, there were a few ways that health insurers could keep premiums low for individual health plans. They could select only people with no prior health problems, to limit the chances of getting stuck with big hospital bills. They could pare back the services and products they offered to avoid ones that could be expensive, like maternity care or prescription drugs. They could increase premiums or deductibles so their customers would pay a larger share of any eventual bills.

By changing the rules, the Affordable Care Act pushed health insurers toward a new strategy: limiting the choice of doctors and hospitals they'll pay for. That move helped insurance companies keep premiums low despite all the new restrictions, but they're inspiring resistance.

Plans sold this year in the new health insurance marketplaces were much more likely than previous ones to include what insurers call tailored or narrow networks. According to an analysis from the consulting firm McKinsey & Company, some 48 percent of plans offered in the most popular category included such features.

'Plans have fewer tools available to them to offer lower-cost coverage options than before, so they're using these tools to do so,' said Brendan Buck, a spokesman for America's Health Insurance Plans, an industry trade group. That's because the Affordable Care Act outlawed a lot of the old options. Insurance companies can't exclude sick customers. They all have to cover a defined set of basic health benefits. There's a cap on how much they can ask patients to pay each year out of pocket, and rules about what percentage of average costs they must cover to sell their plans in a certain category.

McKinsey defined 'narrow network' plan as one that included less than 70 percent of the doctors and hospitals in a given metropolitan area, though some plans they surveyed covered fewer than 30 percent of local providers. The plans save money by allowing insurers to avoid hospitals and doctors that charge high prices. Insurers can offer favored hospitals lots of guaranteed patients in exchange for lower prices, or can simply squeeze out hospitals that won't negotiate on rates. That means that, in some markets, expensive, popular specialty hospitals aren't covered. In some extra-narrow plans, only one big health system gets covered. Overall, the strategy has lowered premiums by between 5 and 20 percent, according to an industry-funded study from the actuarial firm Milliman.

The concept is not new to health insurance, which suggests that many people may turn out to like the trade-off between low premiums and a smaller selection of providers. Traditional H.M.O.s, like Kaiser Permanente in California and Group Health Cooperative in Washington, have long attracted patients despite their lack of flexibility. And seniors are increasingly choosing private Medicare Advantage plans, which tend to have limited networks, but lower premiums and some extra benefits, ] over traditional Medicare, which covers every willing provider.

In the marketplaces, so far, consumers appear to have also been choosing the narrow network plans; over half of people who understood what they were buying deliberately chose the cheaper plan with fewer doctors, according to a recent survey from the health care research group the Commonwealth Fund. (The poll also found, however, that 25 percent of people who bought new insurance didn't even understand such a choice was in play.)

But not everyone who chose a cheaper plan this year is happy. In California and Florida, consumers are complaining that they can't get care from promised doctors. In New York City, patients have protested plans offer no out-of-network coverage at all. Even the insurance industry survey found that about 10 percent of patients don't even have the choice of a more-expensive broad plan in their market. State regulators in Washington and Montana have begun writing rules to ensure that plans cover some minimum number of doctors. After all, one easy way to save money on health care is to cover so few doctors that patients can't get the care they need. The federal government will begin tightening its own rules to make sure that narrow networks don't get too narrow. There is some precedent for the reaction: In the 1990s, cheaper narrow-network H.M.O. plans proliferated in the employer market, but disappeared after mass public outcry.

But even if the skinniest plans are widened by regulation, narrow plans are probably here to stay this time. The whole idea of the marketplaces was to give insurers an opportunity to compete for customers on price. And as long as price continues to drive shopping decisions and the old tactics are out, insurers have every motivation to keep these plans on the market.