Exchange Insights Courtesy of McKinsey

In May 2014, the consulting firm McKinsey and Co. published a series of articles about consumer behavior on the public healthcare exchanges. Their studies reveal several interesting insights, and I've pulled out a few here to share / comment on (you can find the full suite of articles here.):

• Perceived affordability was the reason most often given for not enrolling by both previously insured and previously uninsured respondents. About 90 percent of all those citing perceived affordability challenges were subsidy-eligible, and among these subsidy-eligible respondents, awareness of the subsidies has remained low. (For example, 66 percent of the April respondents and 65 percent of the February respondents who were subsidy-eligible and who reported that they had shopped but did not enroll because of affordability concerns were unaware of their eligibility). Among previously uninsured, subsidy-eligible respondents, those who indicated that they were aware of the subsidies were almost three times as likely to have reported enrolling as those who were unaware.
• There seems to be a recurring theme in many of McKinsey’s observations, which is the fact that consumer education / understanding of how the Exchanges work is very low.  Subsidized plans is a key provision for many of the consumers that the Exchange is meant to target.  It seems to me the success of these Exchanges is largely contingent upon awareness and education of how it actually works!
• Narrowed networks are available to 92 percent of that population; they make up about half (48 percent) of all exchange networks across the U.S. and 60 percent of the networks in the largest city in each state. The increased prevalence of narrowed networks gives consumers a wider range of value propositions and prices among health insurance plans. But, if a consumer purchases a narrowed network product, then at the point of access, the choice of providers is reduced. Compared to plans with narrowed networks, products with broad networks have a median increase in premiums of 13 to 17 percent (when the analysis is controlled for payor, product type, rating area, and metal tier); the maximum increase is 53 percent. Across the country, close to 70 percent of the lowest- price products are built around narrow, ultra-narrow, or tiered networks.
• They’re here!  Narrow, and ultra narrow networks.  I wasn’t even aware that Ultra-Narrows existed (defined as inclusive of less than 30% of a defined geography’s / rating area’s providers).  It will be interesting to see how this plays out over the next year – will consumers be disappointed at the point of access? I'm sure this will largely vary by consumer segment.  Additionally, for those with more complex medical conditions, what will happen if they need to go out of network for care?  Do the design of these narrow networks include provisions for outlier circumstances?  I remember a narrow network-like offering in Boston inclusive of a contract with Mass Gen that allowed patients to utilize the health system’s services for highly complex cases that could not be addressed in-network
• In our April consumer survey, 42 percent of the respondents who indicated they had enrolled in an ACA plan and were aware of the network type reported purchasing a product with a narrowed network. However, 26 percent of those who indicated they had enrolled in an ACA plan were unaware of the network type they had selected.
• Again, the education theme comes up – will be interesting to see how consumers respond to satisfaction with narrow network plans.  And what is the Exchange sign-up process like, and how can it be improved so purchasers are made more aware of what they are actually getting