Where you live helps determine cost of health insurance exchange plans

By Susan Ladika Posted : 10/28/2013

dollar over map of USAThe rollout of the state health exchanges Oct. 1 shows there's no one-size-fits-all approach when it comes to monthly premiums and policy availability. The number of health insurance policies sold and the prices you pay can vary radically, not just state by state, but even county by county within the same state.

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But you have more time to sort out your options. The federal government pushed back the deadline to sign up for health insurance until March 31. That gives you an extra six weeks to purchase insurance before facing a penalty for being uninsured.

HealthCare.gov, the portal residents of 34 states must use to sign up for health insurance, has been plagued by technical problems since the launch. Not only are people unable to sign up for insurance, the system in some cases is dishing out incorrect information.

Even if the information you receive is correct, you may find it doesn't match your expectations. Here are some of the reasons why policies and premiums vary from place to place.

State vs. federal exchanges

Some state exchanges are run by their respective states, while in the majority of cases they're run by the federal government. The federal government is managing the health insurance exchanges in 34 states, while 16 states and the District of Columbia have established their own exchanges.

All policies sold on state-run or federally run exchanges have to meet certain minimum federal standards to be considered a qualified health plan, but some states have imposed additional criteria that insurers must meet before they can sell plans on those exchanges.

In addition, the number of insurers in each state can differ greatly. The federal government and some states allowed any insurers that met the criteria to sell their policies on the exchanges, while others were more selective, says Rachel Dolan, policy specialist at the National Academy for State Health Policy.

Number of policies varies widely on health insurance exchanges

Along with differences in the number of insurers in each state, the number of policies they sell on the exchanges varies widely from state to state, as well as within the same state.

A U.S. Department of Health and Human Services (HHS) study of those states with federally run exchanges shows they have an average of eight companies selling health insurance on the exchanges, but some states have just one or two providers.

And the difference in the number of qualified health plans available is extreme. Depending on where you live, the number of policies available can range from six to 169.

Each exchange has four policy levels:  platinum, gold, silver and bronze. Bronze plans have the lowest premiums and cover 60 percent of costs. Platinum plans have the highest premiums, but cover 90 percent of costs.

The availability of policies within different regions of the same state can be startling. In Miami-Dade County, Fla., 48 silver plans are available. In contrast, in several rural Florida counties, just eight plans are offered, according to a study by Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communications organization not affiliated with Kaiser Permanente.

Competition contributes to health insurance exchange prices

The number of competitors in an area is one factor influencing rates, says John Graves, assistant professor at the Vanderbilt University School of Medicine.

"There are generally lower premiums in areas where there are more issuers, though it doesn't totally explain variations," Graves says.

The differences are particularly stark in Georgia, where a 42-year-old living in the county with the most expensive health insurance in the state would pay twice as much as a 42-year-old living in the least expensive county, a study done by Kaiser Health News of HHS data found.

While the counties aren't named, premiums would cost $499 a month in the most expensive county, and only $247 a month in the least expensive one -- a difference of 102 percent.

Between states, the differences are even more pronounced. That same 42-year-old would pay $175 per month in the least expensive county in Arizona, and $409 in the least expensive county in Wyoming.

Example: Intrastate Price Variation Of Second-Lowest-Cost Silver Plans For 42-Year-Olds

State

Individual plan for a 42-year-old in the least expensive county

Individual plan for a 42-year-old in the most expensive

Percent Difference

GA

$247

$499

102%

WI

$253

$461

82%

PA

$176

$311

77%

AZ

$175

$271

55%

MO

$247

$374

52%

FL

$241

$366

52%

OH

$247

$369

49%

TX

$196

$286

46%

IL

$209

$296

41%

SC

$239

$329

38%

NM

$202

$274

36%

ME

$306

$405

33%

MI

$232

$300

29%

IA

$206

$265

29%

IN

$284

$365

29%

MS

$339

$425

25%

NC

$279

$344

23%

KS

$205

$250

22%

WV

$245

$299

22%

SD

$274

$330

20%

TN

$194

$233

20%

NE

$235

$281

20%

AL

$246

$290

18%

VA

$262

$307

17%

OK

$199

$231

16%

AR

$284

$317

12%

LA

$302

$332

10%

UT

$187

$204

9%

WY

$409

$442

8%

ID

$226

$240

6%

ND

$281

$298

6%

MT

$258

$268

4%

AK

$395

$395

0%

NJ

$329

$329

0%

NH

$300

$300

0%

DE

$300

$300

0%

Source: U.S. Department of Health and Human Services and Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation.

Insurer expectations

Another factor, Graves says, is that insurance companies don't know what to expect, particularly if they're not accustomed to "dealing with the health care needs of low- and moderate-income people." They may fear they need to set premiums higher to make sure they can cover health care costs.

In Tennessee, where the state's Medicaid program is run by a managed care organization, good actuarial data is available to help insurers set rates. So even though Tennessee has a "relatively unhealthy population, it has among the lowest exchange premiums in the country," Graves says. In neighboring Georgia, which has a similar population, but not the same type of data available to help insurers set rates, premiums are among the highest in the nation.

Premiums "could smooth out with time," Graves say, as insurers get a better sense of the health risks of the populations they're dealing with.

And if they've charged too much, you'll receive a rebate, he says. Your insurer must spend at least 80 percent of its total premium dollars on medical care and quality improvements. If it doesn't, you'll have money refunded to you.

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