Tuesday, November 12, 2013
It appears that the first lawsuit in the country protesting the narrow networks that many health insurance plans being offered on the exchanges are using to control costs has been filed here in my home state of Washington. Seattle Children's Hospital is suing the Washington Office of Insurance Commissioner for approving a number of exchange plans that exclude Seattle Children's from their networks of providers. The hospital is also pursuing administrative relief for exclusion from the networks. Presumably, the cost of care at Seattle Children's is significantly higher than care at other institutions. Seattle Children's points to the fact that it offers many pediatric specialty services not available elsewhere in the area, as a reason for its higher cost of care.
Seattle Children's makes an interesting standing argument in the case, claiming that patients enrolled in the plans that exclude Seattle Children's will only go to that hospital when they are very ill, and therefore those patients will consume more resources. This will reduce resources available for other patients, and impair Seattle Children's ability to serve the "pediatric healthcare needs of the region." As a Constitutional Law and Federal Courts professor, I think this injury may be a little too attenuated to satisfy standing, but we shall see.
I am guessing that this lawsuit is the forerunner of many other legal, administrative, and political challenges to the narrow networks that many plans on the exchanges are using in order to control costs. It remains to be seen if there is the type of consumer backlash to these plans that we saw in the 1990's when consumers rebelled against tightly controlled HMOs with narrow networks.