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Expand chart
Adapted from Kaiser Family Foundation; Note: "<49 workers" category includes firms that have 3 to 49 workers. Chart: Axios Visuals

There's been a lot of discussion of narrow provider networks and how they reduce costs by limiting access to the highest priced providers. They're commonplace in the Affordable Care Act marketplaces where about 10 million people are enrolled, and in the individual market generally — but they are actually quite rare in the group market, where about 152 million Americans get coverage through their employers.

Why it matters: Don't confuse the ACA with the health insurance market most people use. Narrow networks are the exception, not the rule, in the private insurance system overall, and there is little reason to believe that will change any time soon.

The details: As the chart shows, only 7% of firms offering health benefits offer narrow network plans, and just 2% report that they or their insurer eliminated a hospital or health system from a provider network in the past year to reduce costs.

  • By contrast, as Vitals has reported, narrow networks are much more common in the individual market. Just 29% of insurance plans in the individual market provide any benefits for out-of-network providers, down from 58% three years ago.
  • In addition, a report by the consulting firm Avalere found that restrictive network plans made up 73% of the Affordable Care Act exchange market in 2018.
  • Surveys also suggest that people who have been uninsured or buy their own coverage may be more willing to accept a tradeoff between provider choice and costs than workers in the group market.

The big reason larger employers have not moved to narrow networks in significant numbers: it’s difficult for them to satisfy a diverse workforce with a limited network of doctors and hospitals, especially in a tight labor market. It’s particularly difficult for them to exclude the most prominent (and often most expensive) providers.

  • Where they are interested, they tend to promote what they regard as high performance networks that meet their guidelines for delivering high value care, not necessarily the lower cost networks more common in the non-group market.

Between the lines: The public often has — and is both intentionally and unintentionally given — the impression that what’s happening in the ACA marketplaces is happening the larger health system. That’s what happened when the general  public believed that sharply rising premiums in the ACA marketplaces were affecting them when they were not.

  • The debate over narrow networks has an impact on the ability of employers and insurers to control medical prices. While there are arguments for and against narrower networks, and the details matter, they are one of the few tools employers have to gain leverage over providers and put pressure on prices.
  • If an employer (or insurers acting on behalf of employers) is not willing to exclude a particular hospital, it has no leverage in price negotiations. Mostly, employers and insurers are losing the price wars today.

The bottom line: Controversial developments like narrow networks in the individual market deserve attention, but also context. They are still a rare bird in the group market where the largest share of Americans get their coverage.

Go deeper

Rahm Emanuel questioned on murder of Laquan McDonald in confirmation hearing

Rahm Emanuel during a Senate Foreign Relations Committee confirmation hearing on Oct. 20. Photo: Sarah Silbiger/Bloomberg via Getty Images

Former Chicago Mayor Rahm Emanuel spoke about the murder of Laquan McDonald during his Senate confirmation hearing Wednesday to become the U.S. ambassador to Japan, saying that "there's not a day or a week that has gone by in the last seven years I haven't thought about this."

Catch up quick: McDonald was a Black teenager who was fatally shot 16 times by Chicago police during Emanuel's tenure as the city's mayor. The 2014 shooting triggered massive protests, both because of its nature and the fact that the officers' body-cam footage was concealed for years.

3 hours ago - World

Biden's ambassador nominee: "China is not an Olympian power"

Nick Burns testifying before the Senate Foreign Relations Committee. Photo: Sarah Silbiger/Bloomberg via Getty Images

President Biden's nominee to serve as ambassador to China delivered a stark assessment of the challenges the U.S. faces in confronting Beijing, but stressed that the rising superpower is "not all-powerful" and the West retains "substantial" advantages.

The big picture: Nicholas Burns, a retired career diplomat and former U.S. ambassador to NATO, used his confirmation hearing Wednesday to echo the growing bipartisan consensus that China poses "the greatest threat to the security of our country and the democratic world" in the 21st century.

Scoop: U.S. and Israel to form team to solve consulate dispute

Secretary of State Antony Blinken (left) and Israeli Foreign Minister Yair Lapid (right) meet in Washington. Photo: Andrew Harnik/Pool/AFP via Getty Images

The U.S. and Israel are planning to form a joint team to hold discreet negotiations on the reopening of the U.S. Consulate in Jerusalem, Israeli officials say.

Why it matters: The consulate handled relations with the Palestinians for 25 years before being shut down by then President Donald Trump in 2019. Senior officials in Israeli Prime Minister Naftali Bennett's government see the consulate issue as a political hot potato that could destabilize their unwieldy coalition.