Health and Science

Obamacare plans get more restrictive and deductibles get pricier in 2018

Key Points
  • Obamacare plans are becoming increasingly restrictive in the size of their health provider networks.
  • Deductibles for the most popular type of Obamacare plans are also rising, to nearly $4,000 on average, in 2018.
  • Both trends reflect efforts by insurers to limit the size of the increase in premium prices for individual health plans.
Isabel Diaz Tinoco (L) and Jose Luis Tinoco speak with Otto Hernandez, an insurance agent from Sunshine Life and Health Advisors, as they shop for insurance under the Affordable Care Act at a store setup in the Mall of Americas on November 1, 2017 in Miami, Florida.
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Obamacare plans are becoming more restrictive in the number of health providers they will cover, even as they increase out-of-pocket charges to an average of nearly $4,000 for the most common type of plans, a new analysis finds.

The Avalere Health report comes two weeks before the close of open enrollment in 2018 individual insurance coverage plans sold on the federal Obamacare marketplace

In 2015, 54 percent of insurance plans sold on that marketplace had more restrictive networks, or the list of medical providers covered for customers.

But this year 68 percent of plans sold on were either a health maintenance organization or exclusive provider organization plan. Each have relatively restrictive or "narrow" networks.

And next year, 73 percent of plans sold on — which serves residents of 39 states — will be either an HMO or EPO, according to the Avalere Health report issued Thursday.

HMOs and EPOs typically only cover the costs of health services provided by doctors, specialists and hospitals in their network.

If a customer gets care outside of the network, they usually have to personally pay all of the bill.

In contrast, preferred provider organizations (PPO) and point of service (POS) plans usually have broader networks of providers, and often cover a share of the cost of care obtained outside of their networks.

HMOs, which generally speaking have the most restrictive networks, comprised 47 percent of plans in 2015 — but will make up 57 percent of the exchange's plans in 2018.

In contrast, PPOs, which in general have the least restrictive networks, were 35 percent of the exchange's plans in 2015, but will make up just 21 percent of its plans next year.

Narrow networks have always been more common in the individual market plans sold on Obamacare exchanges than in the group market, where people who have insurance through a job are covered.

Caroline Pearson, an Avalere Health senior vice president, said more Obamacare plans are using narrow provider networks in an effort to limit how much they have to raise premiums, or the monthly cost of coverage to customers.

Insurers are often able to negotiate better prices from hospitals and doctors if those providers are in narrow networks, because those providers will have less competition for customers' business.

But Pearson noted, "These narrow network plans may come at a lower price tag for consumers, but they may also limit consumer choice and access to specialist care."

In another effort to keep premium price hikes under control, insurers are increasing deductibles for the most popular type of Obamacare plans.

The average deductible for so-called silver plans will rise to $3,937 in 2018 for plans sold on and on exchanges separately run by the states of California and New York, Avalere found.

That is up from an average deductible of $3,703 for silver plans this year.

A deductible is the amount of money a customer must personally pay out of pocket for many health services before their plan will start to cover the cost of care. Most customers on Obamacare exchanges buy silver plans, which cover 70 percent of health expenses.

Deductibles of the second-most popular type of Obamacare coverage, bronze plans, are decreasing, from an average of $6,014 this year to $5,873 next year, according to Avalere Health. Bronze plans cover 60 percent of their customers' medical costs.

Elizabeth Carpenter, another senior vice president at Avalare, said that the trend toward higher-deductible silver plans, as well as narrower networks, reflects insurers' understanding that customers "really value their monthly payment" costs.

"What you tend to see is that consumers choose a plan based on a monthly payment," Carpenter said.

But "then they run into issues because the provider is not in-network, or they have to come up with money to pay for a deductible that they weren't anticipating," she said.