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In South Dakota, the Narrow Network Question Will Be Settled By the Voters

Mary K. Caffrey
A ballot question to limit narrow networks in South Dakota evokes the outcry that occurred when managed care first sought to rein in costs in the 1990s. Critics of the measure say its passage will push up premiums 20 percent.
In South Dakota, snow starts falling in September, and large expanses are bereft of people. So when managed care brings the term “narrow network” here, that can translate into a drive of 300 miles to see a doctor, depending on the diagnosis.

Some in South Dakota have had enough, and they’ve sponsored a ballot question, known as Measure 17, that will let voters decide the future of narrow networks. It’s just one example of the resistance that is brewing in some parts of the country to the practice, which was already increasing in managed care and has escalated under the Affordable Care Act (ACA), as health insurance marketplaces strive to hold costs in check.

Narrow networks are evoking the same visceral response that managed care itself did when it emerged in the 1990s. Over time, pushback from consumers and hospitals eroded savings from those early efforts to rein in expenses by limiting which doctors patients could see, and which hospitals patients could use.

What’s the logic of a narrow network? Health plans use them in two ways: they select those providers with the best quality records to reduce the expense of errors or poor care, and they use the leverage of the narrow network to push down costs.

According to The Washington Post, about 70 percent of health plans sold on the ACA's health insurance marketplaces this past year had narrow or ultra-narrow networks; the McKinsey and Co defined "narrow" as excluding at least 30 percent of an area's largest hospitals.

Resistance to narrow networks has cropped up in a variety of states, with vastly different populations and health insurance profiles: Mississippi and Pennsylvania, New Hampshire and Washington. In New Hampshire, state lawmakers have discussed legislation to limit the practice.

But since narrow networks are designed to hold down costs, unraveling them is not without consequence. In South Dakota, physicians with Regional Health have opposed Measure 17, saying that its passage could increase healthcare costs among South Dakota residents by as much as 20 percent.

Regional Health Chief Medical Officer Dr David Klocke says, "If all patients can go to all providers, no provider can provide that discounted rate anymore for the health plan and therefore, they have to raise their premium prices."

Around the Web

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New Hampshire Isn’t the Only State Balking at Narrow Networks

South Dakota Providers Pick Sides on Measure 17

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