This fall, Indiana's new online health-insurance marketplace will present some tough choices for consumers like John Nowak, who will be able to pick a plan from his current insurer-or go for one that includes his primary-care doctor.
That is because Mr. Nowak's current insurer won't include Indiana's biggest health-care provider, 19-hospital Indiana University Health, in the plans it sells on the consumer exchange. If Mr. Nowak buys a new exchange plan from WellPoint Inc.'s Anthem Blue Cross and Blue Shield, he will generally have to pay the cost out of his own pocket if he sees the system's doctors, because they aren't in the network.
Mr. Nowak, a 48-year-old Indianapolis medical-spa owner, likes WellPoint. But he has been seeing an Indiana University-affiliated physician for five years, and "when you get a trust with a doctor, you want to stick with them," he said.
Similar situations are likely to occur around the country, as details emerge about the coverage available through the new consumer marketplaces created by the federal health law. Many of the plans will include relatively few choices of doctors and hospitals. In some cases, plans will layer on other limits, such as requirements that patients get referrals to see specialists, or obtain insurer authorization before pricey procedures.
A McKinsey & Co. analysis of 955 consumer exchange-plan filings, from 13 states that were among the earliest to make them public, found that 47% were health-maintenance organizations or similarly designed plans. Such plans generally don't pay for care provided outside their networks. A number of other plans, though classed as preferred-provider organizations, or PPOs, will also have limited choices of doctors and hospitals in their networks.
The big reason behind these limited plans: Cost.
Insurers are betting that consumers who buy plans on the exchanges will be willing to trade some choice and flexibility in order to get cheaper premiums. Smaller networks of providers generally translate to lower premiums, because insurers can negotiate discounts with health-care providers who will then have less competition for patients within the network.
WellPoint said it is using more-limited networks for most of the new marketplaces, and it aims to take at least 10% out of the premium costs.
"Individuals are making a lot of choices based on cost, particularly because it's coming out of their pockets," said Steve Hamman, a vice president at Blue Cross and Blue Shield of Illinois, a unit of Health Care Service Corp. He said his insurer's exchange products with smaller provider networks will cost 20% to 30% less than some other plans with a bigger selection of hospitals and doctors that the insurer will also sell in the marketplace.
One upshot of these efforts is that some consumer exchange plans will sideline well-known institutions-some of which may be most likely to balk at discounted rates. In the Chicago area, Blue Cross and Blue Shield of Illinois said it would sell some plans that don't have Rush University Medical Center or Northwestern Memorial Hospital in their networks.
In Los Angeles, most insurers won't include UCLA Medical Center, which struck a deal only with WellPoint. BlueCross BlueShield of Tennessee will have some plans that don't include Vanderbilt University Medical Center.
Traditionally, Americans have been reluctant to accept curbs on their health-care choices, strategies that many rejected in the 1990s. In 2012, just 16% of employees with workplace-provided coverage were enrolled in HMOs, according to a Kaiser Family Foundation survey. HMOs represented less than 5% of the consumer plans sold through eHealth Inc.'s eHealthInsurance.com in a 2012 tally.
But insurer-sponsored research involving tens of thousands of consumers has shown that people buying in the new exchanges, many now uninsured, will be most closely focused on premiums. In tests, many were willing to sacrifice choice of providers for a lower price.
Mary Ann Galloway, 63, an Indianapolis health-care consultant who is uninsured, said that when she looks for coverage on the new exchange, "probably cost is the most overriding issue for me." She would be willing to settle for a smaller choice of providers, and even switch from her current Indiana University-affiliated doctor, "if the costs and benefits were better somewhere else."
Some plans will be built largely around just one hospital system. In New York, North Shore-Long Island Jewish Health System is launching a plan that will generally cover care only at its own 15 hospitals and likely one other it doesn't own, and from doctors who work for the system or an affiliated association.
"We want to be very competitive and provide a good network at low cost," said Michael J. Dowling, North Shore-Long Island Jewish's chief executive.
For some people, smaller-network plans may be the only option. In New Hampshire, WellPoint will be the sole carrier in the new consumer marketplace, where its plans will include 14 of the 26 hospitals, and 65% of the primary-care doctors, that are in its biggest PPO network. WellPoint said limited networks "have the potential to produce cost savings and continue to offer quality care and convenience."
The federal law requires exchange plans to include enough providers so that services are available "without unreasonable delay," and many states also have more specific standards.
A spokeswoman for the federal Department of Health and Human Services said that in the new marketplaces, "plans will compete side by side, and consumers can compare based on the factors that are important to them to find the plan that best fits their needs and budget."
As for Mr. Nowak, he said he'll likely seek a plan that included his doctor.
"The premium is important to me, but my doctor is more important," he said.
Indiana University Health said it would be included in the exchange plans of at least one Indiana carrier, MDwise Inc., a largely Medicaid-focused nonprofit in which it has an ownership stake.