Top Cancer Hospital Not Included on Obamacare Plans Sold in NY

One of New York’s top hospitals, the first one in the world dedicated to treating cancer, is not currently included in any Obamacare plans being sold in the state.

Memorial Sloan-Kettering Cancer Center is one of the largest cancer hospitals in the world, but for the million or so New Yorkers who are eventually expected to purchase insurance over the state’s exchange, treatment there will not be part of their coverage.

A spokesperson for the hospital told the Associated Press, “We want to be accessible and expect to be in network with one or more ACA plans.” Some agreement with insurers could still be reached before January 1st.

Meanwhile, two other major New York hospitals have made agreements with just a handful of the 19 insurance providers selling plans on the New York exchange.

The situation in New York is a part of a larger pattern. In Washington, Seattle’s Children’s Hospital is suing the state because it was left out of plans offered on the state’s exchange.

All of this undermines another promise which President Obama and fellow Democrats made when trying to pass the Affordable Care Act: that if you liked your doctor you could keep your doctor. This was a corollary of the President’s promise about keeping your plan, since, for most people, access to doctors is part of their plan.

As we’ve learned recently, millions of Americans cannot keep the plans they had (with millions more to follow). But one of the underreported aspects of Obamacare is that it actually encourages insurers to reduce provider networks as a way to control costs.

Health insurance industry expert Robert Laszewski has a blog post today which helps explain this was an unintended (though not unforeseeable) consequence of the law’s structure:

In the old health insurance market, insurers competed for businessthrough price and plan design. Network size has historically been aminor factor with consumers and employer plan sponsors expecting to beable to use about any doctor or hospital, especially those with the bestreputations.

But with the Affordable Care Act, health plans lost two of theirhistorically big plan pricing variables; medical underwriting and plandesign.

Under Obamacare, insurers can no longer underwrite, or exclude people,to keep the cost of their individual market health insurance plansdown–a good thing.

Under Obamacare, insurers can no longer offer a wide variety of healthinsurance products in the individual health market–a good thing when itgets rid of the worst of the health plans out there but not such a goodthing when it gets rid of the many policies people could choose andhave liked and are now mad about losing. Now, all health plans have tofit into four strict boxes: Bronze, Silver, Gold, and Platinum. And,these boxes can only differ by out-of-pocket costs–not benefits.

So, if a health plan can no longer vary its benefit choices, how can it distinguish itself on price?

A big variable therefore becomes the provider network.

Since some hospitals are simply more expensive than others, those hospitals get dropped to cut costs. That’s what led insurers to omit Memorial Sloan-Kettering in New York. It’s also what led the largest insurer in Seattle to leave Seattle Children’s Hospital out of its offerings.

Even if Sloan-Kettering and Seattle Children’s get added to some plans eventually, they will be the more expensive plans. In fact, the structure of the system will mean that subsidies will be tied to the cost of one of the plans with a restricted network of hospitals:

Remember, the federal health insurance subsidies are tied to the secondlowest-cost Silver plan. Which health plan is offering that secondlowest-cost Silver plan? Likely one of these narrow network plans. As aresult, if you want a wider network plan, any cost difference for thatplan becomes the responsibility of the consumer.

Laszewski clearly thinks some of these trade-offs are beneficial. Many Americans might agree with him. But the President repeatedly spoke as if these trade-offs did not exist. He promised that if you liked your doctor, you could keep your doctor. That was not true for millions of Americans, and there’s really no excuse for the President not to have known the truth when he said otherwise.